Thanks for that - thought that would be the case
Interactive Brokers
- Thread starter MrMarcus
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I don't have an account with IB, but, as an example, I don't get some bank statements/tax income stuff for 'months' after the Fin Year.....
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You can make one yourself in acct management. I made one over the Eofy wkend. Specify start and end dates and ure done!
Thanks. I didn't think about the custom dates. I was selecting the Financial year option and I was not getting any result.
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that's what i do too. it's reasonably decent but unfortunately does appear to use what i'm guessing are the US rules for capital gains, as it seems that these reports are always averaging out your cost base when it works out realised and unrealised PNL. however for aust stocks you're allowed to nominate which parcel(s) you're disposing of and use the entry price of that parcel as your cost base to determine CG. i'm not aware of any facility to do that in IB so i end up working out my CG in my own spreadsheets anyway. anyone know if there is in fact a way to designate how many units of which parcels you're disposing of when you sell?
Well IB have put the dividend statement up for claiming franking credits but it seems to be full of errors
Eg for telstra dividend is says i received 100% franked dividend of $165 which is correct but it then lists the franked amount as $2 and unfranked amount as $0. I dont know how that is supposed to make sense. Some of the dividends even have the franked and unfranked amounts totalling more than the amount received
Eg for telstra dividend is says i received 100% franked dividend of $165 which is correct but it then lists the franked amount as $2 and unfranked amount as $0. I dont know how that is supposed to make sense. Some of the dividends even have the franked and unfranked amounts totalling more than the amount received
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Well IB have put the dividend statement up for claiming franking credits but it seems to be full of errors
Eg for telstra dividend is says i received 100% franked dividend of $165 which is correct but it then lists the franked amount as $2 and unfranked amount as $0. I dont know how that is supposed to make sense. Some of the dividends even have the franked and unfranked amounts totalling more than the amount received
where do you get the franking credits, i re-generated my activity statement for the fiscal year just ended and didn't see any mention of franking credits in the dividends section or any other section in that statement. it just has the actual dividend amount received.
Its a different report in the tax forms section. its called "income transactions taxable"
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ok found it. i don't hold TLS but yeah they got ANZ and CBA wrong for me - not just the franked and unfranked amounts, but even the number of shares and amounts received were wrong. though they did get the other couple dozen dividend payments correct. i'm probably going to stick with maintaining it in a spreadsheet anyway, but would have been good to have this thing correct for double checking purposes.
Yes you're right the amount received is wrong for me too and its all related to "payment in lieu of dividend" on the activity statements. Anywhere I got one of these then they have used that exact amount for the franked/unfranked amount and the rest of the dividend payment is the "amount received". So I can see what they've done but it still makes no sense to me.
I've made about 500 trades this tax year through IB. First tax year I've traded US stocks and very interested in this discussion. I did convert just prior to EOFY to $AUD ie: Convert all Non Base Currency Balances in TWS.
Not sure if that conversion was necessary though, would still have to pull out and calculate interest, dividend amounts and brokerage etc. Although, I can see exactly the final capital gain from subtracting my initial capital.
Anyway, reason for this post I have found some software that I can import IB Flex reports with exchange rates etc. Very easy but just wondering if you think the capital gains calculation is correct. It is...
P&L = Exit Price * Quantity * Exchange Rate at Exit Date - Entry Price * Quantity * Exchange Rate at Entry Date
Edit: bit of background, I do use Stator AFM for Aussie stocks and they import fine. The problem with IB is importing so many trades into Stator when the IB exported CSV files would need a lot of manipulation. Anthony (Stator fellow) has said there will be a import plugin for IB in the future.
Thanks.
From what i understand that this calculation is correct. Another thing i will have to do is to match trading lots so that the tax is reduced.
Anyway what software is that.
I found it here:
https://www.aussiestockforums.com/forums/showthread.php?t=19811
Yesterday I setup the Flex query and imported. Took about 30min max and all results are there. There is a Youtube clip on how to do it.
By the way, how does "matching trading lots" reduce tax?
Cheers, SB.
Thanks for the link.
About matching lots, if you are an Investor for tax purposes, you can reduce the capital gains if the capital gain is over a period of more than 1 year.
It may not be applicable if you are a trader for tax purposes.
Ahhh OK the 12 month 50% discount. Yes I'm an investor but none of those discounts this time - bugga!
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a little of topic but signed up to IB what is the first minimum deposit required? and account is on flat rate is that the best bang for buck?
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Yes, I agree with Hawamahal, that is how I understand it too.
But what I have also done for the first time this year is calculate foreign exchange gains and losses in my USD IB account. It took me a long time to figure out what is required, but I think I understand it now. I use the method used in this ATO example:
General Overview: http://www.ato.gov.au/Business/Forex/
Specific Example: http://www.ato.gov.au/Business/Fore...-for-fungible-assets,-rights-and-obligations/
It's a pain in the butt to do, particularly for an account with lots of small transactions (monthly interest charges, etc.), but it is worth considering. As an example, consider the following:
Assume you have USD 0 balance in your a/c to begin with.
Buy USD100,000 of shares when exchange rate USD/AUD is 1.05
Sell same shares for USD120,000 when exchange rate USD/AUD is .90
Captal gain for Australian Tax is, as discussed by us previously:
120,000 / 0.9 - 100,000 / 1.05 =AUD133,333 - AUD95,238 = AUD38,095
Your capital gain has been inflated because not only does it include the increase in the price of the shares, but also a gain that is a result of exchange rate movement.
However, if you separately include in your tax return forex gains and losses, you will also show this result (I am using ATO terminology):
Obligation to pay IB USD100,000 due to withdrawal of USD100,000 from your account to buy shares.
Cessation of obligation to pay IB USD100,000 by sale of shares for USD120,000. USD100,000 of the sale proceeds is called a Realisation event 4 (cessation of obligation to pay IB) and the balance of USD20,000 becomes a right you now have against IB for them to pay you USD. This latter gets carried forward to some subsequent realisation event, which I won't go into.
The realisation event 4 (deposit of USD100,000) causes the following calculation to take place (in line with the ATO example above):
ADE (Australian dollar equivalent) of deposit of USD100,000 (@0.90) = AUD111,111
ADE of assuming the obligation to pay IB USD100,000 (@1.05) = AUD95,238
Foreign Exchange Loss = 15,873
What this is saying in human terms is that when you borrowed USD100,000 from IB to buy the shares you were indebted to them for AUD95,238 (at that time), but due to the aussie falling in the meantime, by the time you got to paying them back, it actually cost you AUD111,111 to repay the USD100,000 owed to them. So you lost AUD15,873 purely due to exchange rate movements.
This AUD15,873 is included in your tax return under D15 Other Deductions (forex gains would be under question 24 - Other Income).
This is a significant amount compared to your capital gain of AUD38,095. Additionally, if your original IB balance wasn't USD0, but say -USD20,000 (at 0.95), you would have more forex losses to claim due to the extra USD20,000 in the proceeds which was carried forward in my example above, but would otherwise have been used up.
Since the USD/AUD rate has been above parity for most of the last few years and is now at about 0.90 with the possibility of going lower, it is likely that many of you are paying extra capital gains on US shares bought in the past but being sold now due to the forex gain built into to CGT formula. You could be losing out on significant potential tax deductions that would mitigate those gains by not calculating forex gains and losses on your IB USD account transactions. With a stable US/AUD it isn't so much an issue, but with the Aussie in free fall, it is worth the effort (and as far as I understand, you are supposed to do anyway).
One last thing, the ATO example that I linked to only dealt with deposits and withdrawals for a US denominated bank account. As far as I understand it, buying shares (in a broker account) should be treated as the equivalent of a withdrawal and selling them as the equivalent of a deposit, so the example is relevant. You should look at it as two separate issues for tax purposes. When you buy USD100,000 of shares, treat that as if you withdrew USD100,000 from your IB account. The withdrawal becomes part of an eventual foreign exchange gain/loss calculation as above. The fact that you used the USD100,000 to buy shares is a separate issue and becomes part of the cost base of a CGT calculation. You could have done nothing with the USD100,000, perhaps given it to a friend or deposited in another account, but it will be relevant for subsequent forex gain/loss calculations. When you sell the shares for USD120,000, that creates a CGT event and becomes part of a CGT calculation. The fact that the proceeds were put into your IB account means that it becomes also a foreign exchange event - a realisation event 4. But the proceeds could have been deposited elsewhere (repay a debt to an American friend) in which case it would just be a CGT event. It is the fact that the proceeds were deposited into your IB account that makes it a foreign exchange event also. Since your USD IB account is a share trading account, the two separate tax issues of CGT and Forex Gains/Losses are affected by one transaction, but conceptually (and tax wise) they are two separate events. I hope that makes sense.
The problem that i see with the ATO method is that you can be loosing money but paying capital gains tax
Below is a hypothetical example
USD Ex rate AUD
Buy 100 1.07 93.46
Sell 90 0.92 97.83
Capital Gain = AUD 4.37
Since we are borrowing money to buy shares, in IB accounts the transaction is actually a loss of USD 10 or AUD 10.87
Below is a hypothetical example
USD Ex rate AUD
Buy 100 1.07 93.46
Sell 90 0.92 97.83
Capital Gain = AUD 4.37
Since we are borrowing money to buy shares, in IB accounts the transaction is actually a loss of USD 10 or AUD 10.87
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what if one avoids carrying a cash position in the foreign currency?
from your eg. what if you were to square up your USD cash position by selling 95,238 AUD/USD @ 1.05 immediately after buying 100k USD shares. then on selling, square it up again by buying 133,333 AUD/USD @ 0.90.
would it then be only necessary to declare 38,095 AUD capital gains, with nothing further needed, since the obligation / cessation of obligation to repay IB in USD has been neutralised by squaring the USD cash position after each trade?
or in this case would you declare a FX gain (from the first FX spot trade against 100k of the second FX spot trade) of 100k / 0.90 - 100k / 1.05 = 15,873 AUD, plus a capital gain of 20k / 0.90 = 22,222 AUD (from the remaining 20k USD that was repatriated as the remainder of the second FX spot trade), which comes to the same 38,095 anyway - but under different income types?
from your eg. what if you were to square up your USD cash position by selling 95,238 AUD/USD @ 1.05 immediately after buying 100k USD shares. then on selling, square it up again by buying 133,333 AUD/USD @ 0.90.
would it then be only necessary to declare 38,095 AUD capital gains, with nothing further needed, since the obligation / cessation of obligation to repay IB in USD has been neutralised by squaring the USD cash position after each trade?
or in this case would you declare a FX gain (from the first FX spot trade against 100k of the second FX spot trade) of 100k / 0.90 - 100k / 1.05 = 15,873 AUD, plus a capital gain of 20k / 0.90 = 22,222 AUD (from the remaining 20k USD that was repatriated as the remainder of the second FX spot trade), which comes to the same 38,095 anyway - but under different income types?
