Interactive Brokers - Company Account

[bill19]

Hi All,

As everyone here knows we can no longer have IB accounts with margins because we live in Australia. I was thinking of setting up a company to get around this restriction but needed to know if this is viable, and if so what are the pitfalls and things to avoid. I don't want to go out, set up a company, and then find IB rejecting my application.

Any advice greatly appreciated.

 

[bellenuit]

Hi All,

As everyone here knows we can no longer have IB accounts with margins because we live in Australia. I was thinking of setting up a company to get around this restriction but needed to know if this is viable, and if so what are the pitfalls and things to avoid. I don't want to go out, set up a company, and then find IB rejecting my application.

Any advice greatly appreciated.

I'm sure others will add, but just some things to be aware of......

1. If the company holds the shares as an investment (e.g. under the CGT system) and not for trading, unlike individuals companies do not get the 50% discount for shares held for more than 1 year.

2. Companies must pay an annual fee to ASIC ($230 in 2013 tax year)

3. Taxation more complex than individuals, so you will likely need an accountant for the company tax.

4. Be careful on how you transfer assets to the company for funding it. If you are transferring shares you currently hold in your own name as an investment, the transfer is classed as a CGT event and you may personally be subject to CGT on the transfer.

5. Although lending (cash/shares) to the company to fund its operations is fine apart from the CGT implications mentioned above, be very careful of borrowing from the company. That opens up a minefield when it comes to its tax implications.