How to trade on the US markets

Hi guys,

I've got shares in a US software company traded on the Nasdaq that I acquired through an employee share purchase plan (ie: I work for the company). Over a number of years the company deducted a % of my gross income to pay for the shares which were bought in 6-monthly batches. They're held in a US E-Trade account (set up by the company) so I've never actually moved money in/out, or transacted with the account.

Now I'd like to sell some of those shares to buy/sell other US shares.

What's the best 'structure' (personal/trust/company) to use for this?
Since I'm not bringing any money back to Oz, any idea on the tax-implications (US and Australia)?
What happens if I do want to bring the money back?

Happy to take recommendations on do's/don'ts from anyone that's currently trading in the US....

Cheers

elsugaraan said:

Hi guys,

I've got shares in a US software company traded on the Nasdaq that I acquired through an employee share purchase plan (ie: I work for the company). Over a number of years the company deducted a % of my gross income to pay for the shares which were bought in 6-monthly batches. They're held in a US E-Trade account (set up by the company) so I've never actually moved money in/out, or transacted with the account.

Now I'd like to sell some of those shares to buy/sell other US shares.

What's the best 'structure' (personal/trust/company) to use for this?
Since I'm not bringing any money back to Oz, any idea on the tax-implications (US and Australia)?
What happens if I do want to bring the money back?

Happy to take recommendations on do's/don'ts from anyone that's currently trading in the US....

Cheers

Click to expand...

Best to talk to your accountant on this. Depends on the amount of funds.

on that topic, are there any issues for and Oz to buy shares in Us market or any broker account will do? I am thinking to open a comsec account, what do you guys think?

xtoreus said:

on that topic, are there any issues for and Oz to buy shares in Us market or any broker account will do? I am thinking to open a comsec account, what do you guys think?

Click to expand...

Interactive Brokers mate, the cheapest, most professional E-Broker on the planet. Seriously, hard to beat, leaves Comsuc for dead.

Cheers,


CanOz

thanks mate

Does anybody know of a superannuation AU account that will allow you to invest in US shares?

elsugaraan said:

Hi guys,

Over a number of years the company deducted a % of my gross income to pay for the shares which were bought in 6-monthly batches. They're held in a US E-Trade account (set up by the company) so I've never actually moved money in/out, or transacted with the account.

Now I'd like to sell some of those shares to buy/sell other US shares.

What's the best 'structure' (personal/trust/company) to use for this?
Since I'm not bringing any money back to Oz, any idea on the tax-implications (US and Australia)?
What happens if I do want to bring the money back?

Click to expand...

Is the E-Trade account in your name or in your employer's name? If in your name, then I don't think you have any choice with regards to the structure to use to sell these shares. So personal is the answer regarding those sales (transfering to a company first before selling would trigger a CGT event, so there is no difference between that and selling directly).

If you intend to actively trade US shares, I would suggest you open an account with a US brokerage. I use Ameritrade which I find excellent. If the E-Trade account is in your name (US E-Trade not Australian E Trade), then you could also use that to trade. I pay $US9.99 for each Ameritrade trade and would think E-trade is similar. I think Commsec is $100. Also, with Ameritrade and US E-Trade your trades are executed immediately. I'm not sure that Australian brokers can do that.

Regarding tax implications. You pay CGT on any capital gains, exactly as if they were Australian shares. It doesn't matter if the money is repatriated to Australia or not, although I think a forex/gain or loss may have to be declared (separate item to CGT) for the time you get the proceeds in cash and repatriate the proceeds. 50% discount applies if held for 1 year + etc. For calculating CGT gain/loss, you translate using the exchange rates at the purchase and sale dates (available from the ATO website). This can introduce anomolies that may or may not work against you. For example, you may incur a loss in US dollars, but when translated to AUD at the different exchange rates for buy and sell dates, it may actually be a gain in Australian dollars, hence you will be taxed.

The tax structure to use for ongoing trading (as opposed to just selling these employee shares that are already in your name) have the same advantages and disadvantages as for trading australian shares. Also, remember if you trade a lot, you (or your trust/company) may be treated as a trader rather than an investor by the tax office, which has other implications (no cgt, thus no cgt discount, can right off losses against other income within same year for that structure you use, +more).

CanOz said:

Interactive Brokers mate, the cheapest, most professional E-Broker on the planet. Seriously, hard to beat, leaves Comsuc for dead.

Cheers,


CanOz

Click to expand...

Hi CanOz

I have also heard good things about interactive brokers from some experts in the states.
Are they able to do forex (AUD-USD->IB account)transfers from my westpac account here in OZ?

I am currently working through maquarie and finding it a little frustrating and expensive.

You can transfer AUD into your IB account. Then buy USD with your AUD. IB's spread is so small that it makes any bank's exchange rate a joke.

alphaman said:

You can transfer AUD into your IB account. Then buy USD with your AUD. IB's spread is so small that it makes any bank's exchange rate a joke.

Click to expand...

Great news. Thanks for that. How hard or easy was it to set up your account?
What kind of waits and paperwork can be expected?

From memory there was a lot of paperwork. I think you need half an hour to go through the application. Waiting time were OK. I got my account opened within a week. The most important part is make sure you reference your deposit with your IB account ID so that IB can tell who the money came from.