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Don't pay wages. Pay dividends.
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- Thread starter MrMarcus
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Don't pay wages. Pay dividends.
Awesome. I'll have a chat with the accountant. I probably should have known that.
skc
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Remember wages can be paid in any amount to any person working for a company, but dividends can only be paid in accordance to share holding.
I think there's a threshold of wage where a company needs to pay super for the employee... it wasn't a huge amount but it offers some flexibility above and beyond dividends alone.
BTW, back on topic... I think switching the tax structure of your own income/trading etc is a big response to a broker changing it's offering in margin lending. I'd investigate other avenues (like another broker) before jumping to set up a company unless you have been planning to do so some time ago.
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Here's the reply to my ticket. I take it to mean there's no changes as far as trading futures is concerned. Seems we're all getting conflicting information at the moment.
Same with me . In addition I got
'In this context, a margin loan means that the total cash amount after adding in all currencies (after taking into account of interest / dividend accruals) in the securities segment is negative. ' What
To be quite honest, I still havnt got my head around what will be permissible or not with a 'cash' account.
Also, they clobbered the idea of dual citizenship saying "the AU margin restriction will be applied to clients with a legal residency in Australia", which goes against earlier forum advice that this might be a workround.
Is it just me? I think this definition is much more workable than a cash account.
Thanks Tech & McLovin, I am looking into an accountant for this.
Jeez this us an unexpected pain in the rear. There's mention of changing brokers above but afaik there is none that offer the margin with $1 US stock brokerage.
Are there at least any benefits (besides trading IB's margin) to starting a company and paying this $800/year? Currently I have an individual account at IB in my wife's name as she is in a lower tax bracket.
No idea why but maybe a company should be in both our names and I think by above posts, the dividend (wage) payment would be equally shared.
I'm not looking to withdraw anything from the IB account for a few years and continue to reinvest profit into my system so I guess 30% tax on any profit. We would still be paying that anyway if in her individual tax.
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Most people trade 50k accounts, with avg share yearly return of 8-12% is it even worth going thru the headache?
Yeah mine is $100K, is that amount worth it?
Is it worth diversifying into the US market?
Is it worth diversifying using a totally different trading style to the one I use on the Aussie?
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That's true. But you'd need to be careful that the person is actually "working" for their wage, ie you're not just giving them a trust like distribution. I guess you then end up back at square one with a company/trust structure to stream income.
Sir Burr said:
Benefits are the lower tax rate. If you're employed and earning over $80k then then a company will be taxed at a lower rate than your marginal rate. It really depends on how much money we're talking about. If you're earning $30k/year and have a trading account with $50k in it then it seems like overkill.
You don't put a company in "both your names". A company is a separate legal person. It can enter into contracts and sue and be sued. You both become shareholders in the company. If you really wanted the most tax effective way then the a company that is owned by a family trust is the way to go, but again it depends on the amounts we're talking about. A trust structure also carries with it some asset protection benefits as you no longer "own" the assets.
The current ASIC fees are $230/year not $800.
Thanks again. About the above, I think Tech meant "all included" accountants fees.
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No worries. For a company only set up to do trading you could always do the return yourself. It's not that hard.
Another posssible downside of a company structure is IB may charge you "professional" data rates. Their documentation says they do for Companies or Trusts - however, I know with trusts you can still elect to be "non-professional" - not sure if this is possible with a company.
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So how do you figure I can now take a short call option if I am operating a cash account and that disallows selling naked calls???
Been wondering about this. When IB ask for financial position of the new company I setup ie:
What You Need for the Small Business Application
- Estimated Net Worth (excluding value of residence).
- Estimated Liquid Net Worth (excluding value of residence).
- Annual Net Income.
- Total Assets.
I suppose if they ask for trading experience, same thing.
Cheers.
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They want to know your net worth. Presumably if your trading on margin they're going to want real assets as security.
tech/a
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Fair enough. It's probably a KYC compliance thing.
I'm just glad there's still a way to trade on a margin account. I already had a company setup, and so it was no extra expense for me to open a company account.
I day trade the E-Mini futures during the US session. I don't trade anything else. Dealing with a cash account with T+1 settlement would be a huge headache. My plan B was to use Mirus/RCG - they're OK, but IB's platform is way superior.
I day trade the E-Mini futures during the US session. I don't trade anything else. Dealing with a cash account with T+1 settlement would be a huge headache. My plan B was to use Mirus/RCG - they're OK, but IB's platform is way superior.
I spoke with IB today.
They told me all company accounts are charged at "professional" data rates.
Fortunately, for what I trade (e-mini), they said the level 1 data cost is the same for professional or non-professional i.e. $10 USD/month.
