Introduction and question

[TheCamino]

Hello fellow aussie traders,

Glad to have found a forum on trading here in Ausralia. I have been a member for Forex Factory for some time and posed a question there in relation to trading here in Australia, but obviuosly this forum would be better suited to my question.

Basically, trading the Forex has been a hobby of mine for some time, but in the last six months I have dedicated many hundreds of hours to this hobby and am have become relatively successful and my account is growing.

Now, my question is, what is the best way for us (Australians) to manage the money they make here (Forex for me). I have heard I should set myself up as a company with ABN etc, but I really have no idea what's involved with doing that. All searches on Google for "setting up home business" bring up a million scam sites that are not related to my quiestion at all. If anyone could point me in the direction of a good website or accounting firm that could help with that side. I am not looking at getting away with paying tax or anything like that (why should i not pay tax? that's the money that keeps our society running!) But want to know what i need to do, come July 1st next year, in relation to the money i have brough back from my US trading account. I obviously need to pay tax on it and it would only be fair that I can at least offset the costs of working from home (internet connection, transfer fees, computer equipment etc.) against the money I have made.

Any advice from those in the know or who have done this themselves would be greatly appreciated.

Thanks in advance

TheCamino.

ps. Sorry, seeing as this is an introduction after all, i should add that I trade the EU and GU using price action only - scalping breakouts, peaks and troughs. No indicators (just the rainbow SMAs, mainly just cause they're nice to look at, LOL)

 

[Glen48]

Hello and welcome, A lot of people try to go mad on making every thing tax decuctable and then get caught when they sell and have to pay re cooped depreciation of CGT. It was a problem before the FWD when people would claim part of their house and a deduction. You could make money helping fools liek me trade???
ABN no problem contact the ATO I use Cashmanager for my tax they are in OZ.
All the best

 

[MS+Tradesim]

Hi TheCamino,

Welcome. Basically, there's not much you can do about altering the tax treatment on income you've already earned. What you can do there is try and maximise your deductions and consider options like contributing to super depending on your income sources - find a good accountant! I'm using Bentleys and the guy I deal with in QLD is clued in. http://www.bentleys.com.au/index.cfm/Home

However, if you are doing quite well and plan to continue in the future, one of the most tax-effective vehicles you can arrange is a discretionary trust with a corporate trustee. This should cost you no more than $1500 and if you are a hands on type you could do it yourself for cheaper.

I have used this site to setup 3 companies. Basically it takes the info you input and produces the paperwork and advises you what you need to send to ASIC to have your company registered. http://www.incorporator.com.au/

And I have used these guys 3 times to establish trusts. They can set up companies as well and seem quite reasonable price-wise. I have not used them for that purpose but they do offer that service. http://www.acis.net.au/

I offer the above as do-it-yourself routes but you need to understand what you are doing to follow that path. Only use these services if you are confident of what you need and are happy to arrange it yourself. A mistake in setting up the structure can cost you a lot down the track - a lot more than you save by doing it yourself rather than arranging these services through an accountant. So get good advice before making any decisions - an accountant can advise you on the best structure for your plans. It will cost now but save you bucketloads of tax down the track. I'd also suggest picking up a book by Nick Renton about trusts in Australia. I forget what the book is called but runs you through the different types of trusts you can establish and how they can be used.

If you do use a company or trust structure you will then need to open new trading accounts in the name of the structure in order to have the income treated accordingly.

 

[TheCamino]

Thanks Glen and MS for you quick replies.

I see there's not too much I can do about money I've already made and brought back wich is fine, I assumed i'll be paying some 50% or so tax on that. It's only a few thousand and yes, I it is in a US account in US$.

Thankyou for your suggestions on doing it myself, but definitely think I'd rather use the expertise of a professional and I will have a look around, although I am here in Melbourne so unless Bentlys are a national group I may need to look elsewhere. Spending some money now to get it all set up correctly and effectively makes a lot of sense to me and certainly don't mind spending the money to do that for in the long run I know i'd be better off, and a lot less stressed out! Just want to make sure I can find someone good down here who has experience in this sort of thing.

Oh and Glen, yeah, not really interested in trying to claim every last thing as a tax deduction. The overheads on working this way are practically nill anyway

Thanks again guys, appreciate the input.

TheCamino

Hi TheCamino,

Welcome. Basically, there's not much you can do about altering the tax treatment on income you've already earned. What you can do there is try and maximise your deductions and consider options like contributing to super depending on your income sources - find a good accountant! I'm using Bentleys and the guy I deal with in QLD is clued in. http://www.bentleys.com.au/index.cfm/Home

However, if you are doing quite well and plan to continue in the future, one of the most tax-effective vehicles you can arrange is a discretionary trust with a corporate trustee. This should cost you no more than $1500 and if you are a hands on type you could do it yourself for cheaper.

I have used this site to setup 3 companies. Basically it takes the info you input and produces the paperwork and advises you what you need to send to ASIC to have your company registered. http://www.incorporator.com.au/

And I have used these guys 3 times to establish trusts. They can set up companies as well and seem quite reasonable price-wise. I have not used them for that purpose but they do offer that service. http://www.acis.net.au/

I offer the above as do-it-yourself routes but you need to understand what you are doing to follow that path. Only use these services if you are confident of what you need and are happy to arrange it yourself. A mistake in setting up the structure can cost you a lot down the track - a lot more than you save by doing it yourself rather than arranging these services through an accountant. So get good advice before making any decisions - an accountant can advise you on the best structure for your plans. It will cost now but save you bucketloads of tax down the track. I'd also suggest picking up a book by Nick Renton about trusts in Australia. I forget what the book is called but runs you through the different types of trusts you can establish and how they can be used.

If you do use a company or trust structure you will then need to open new trading accounts in the name of the structure in order to have the income treated accordingly.