Quick question: How does brokerage and tax work?

[ShiroKage]

With tax time almost upon us I realised I had a question:

Does the brokerage you pay get factored into your total taxable income?

eg. say I made $1000 profit after buying and selling some shares (within the same financial year) before brokerage and taxes. say the brokerage was $50 to buy, $50 to sell, so my actual profit as far as I'm concerned is $900.

Do I declare the profit to be $900? Or similiarly, do I declare the profit to be $1000, but claim the $100 in expenseses somewhere else? Or does the taxman not give a damn, and I have to declare the full $1000, effectively paying tax on $100 that never even reached my pocket?

 

[reece55]

Re: Quick Question:How does brokerage and tax work?

With tax time almost upon us I realised I had a question:

Does the brokerage you pay get factored into your total taxable income?

eg. say I made $1000 profit after buying and selling some shares (within the same financial year) before brokerage and taxes. say the brokerage was $50 to buy, $50 to sell, so my actual profit as far as I'm concerned is $900.

Do I declare the profit to be $900? Or similiarly, do I declare the profit to be $1000, but claim the $100 in expenseses somewhere else? Or does the taxman not give a damn, and I have to declare the full $1000, effectively paying tax on $100 that never even reached my pocket?

Assuming you are an investor (hold your shares on a capital account) and not a trader (hold your shares on a revenue account), then you can only claim the brokerage when you dispose of your interest. So in your example, the answer is yes. If you have an open position, then it forms part of the cost base of the investment.

Cheers and this does not constitute advice, blada blada blada........

Cheers

 

[Prem]

Re: Quick Question:How does brokerage and tax work?

Is there a way I can trade direct with the ASX. (Without paying brokerage)

Thanks in advance !

 

[Julia]

Re: Quick Question:How does brokerage and tax work?

Is there a way I can trade direct with the ASX. (Without paying brokerage)

Thanks in advance !

No. If there were, why would there be any brokers???

 

[Prem]

Who do brokers pay to trade on the ASX?

Thanks in advance

 

[cfollett]

Re: Quick Question:How does brokerage and tax work?

Assuming you are an investor (hold your shares on a capital account) and not a trader (hold your shares on a revenue account), then you can only claim the brokerage when you dispose of your interest. So in your example, the answer is yes. If you have an open position, then it forms part of the cost base of the investment.

Cheers and this does not constitute advice, blada blada blada........

Cheers

Just a follow up question for that.

You've stated that you claim brokerage of buy + sell at the time of disposal.

What if you only sell half your interest?

eg. using the same example.. 50 brokerage for buy + sell.

You sell half your shares for 500 and keep 500.

What brokerage is claimed there?

 

[bonkerrs]

Re: Quick Question:How does brokerage and tax work?

Just a follow up question for that.

You've stated that you claim brokerage of buy + sell at the time of disposal.

What if you only sell half your interest?

eg. using the same example.. 50 brokerage for buy + sell.

You sell half your shares for 500 and keep 500.

What brokerage is claimed there?

cfollett. Here is an ATO example taken from the help screen of ETax 2009 in relation to cost element and CGT

"Jenna bought 100 shares in ABC Ltd for $20 per share on 1 February 2000. Jenna's paid $200 in brokerage fees to buy the shares. On 1 May 2008, Jenna sold 50 of her ABC Ltd shares for $1,250 and incurred $50 brokerage.

When Jenna enters her share details she will include only half of the purchase cost of the 100 shares and half of the brokerage paid on acquisition as this is the portion of the cost base that relates to the 50 shares she disposed of. She can include the entire $50 brokerage incurred on sale of the shares as that cost relates exclusively to the shares sold."

In regards to this share - her cost base for 07/08 is $1,150.00 (1/2 purchase price 1000 & 1/2 enter brokerage 100 + full exit brokerage 50).

 

[Prem]

Late reply much

way to bump a 2year old thread

 

[bonkerrs]

Late reply much

way to bump a 2year old thread

Yeah, but I was so excited to be able to answer a question rather ask for once I didn't even notice the date of the last post. :

 

[Kez180]

Lol at least he was probably using the search function or he'd never have found it...