Tax deductible expenses

[phoenixrising]

The ATO is drafting legislation on CFD's

http://law.ato.gov.au/atolaw/view.htm?find=((spread)%20and%20(betting))&docid=dtr/tr2004d17/nat/ato/00001

Hope that link works

Basically talks about horse racing type betting and futures comparison

Cheers

 

[roofus]

eys your link works. People follwing this thread should read it as its another example of the tax office making the rules up as they go.

 

[RichKid]

GreatPig-GAMBLE- to play games of chance for money,to take risk for some advantage, to risk in gambling ie. bet, an undertaking involving risk. Websters.

There's a small section in another thread (I started it but no one else is interested) on Spread Betting- it has a brief blurb on 'skill' and gambling
https://www.aussiestockforums.com/forums/showthread.php?t=537

Looks like the ATO is still ahead on that one as I haven't heard of any updates where IG Markets have been found to be correct.

I'd be interested to have the citations for the higher level court decisions if you have them roofus. BTW, are you a qualified lawyer or accountant? Don't be offended if you aren't just thought you may be litigating yourself otherwise.

 

[roofus]

RichKid- i read your post on spread betting and although there is a slight connectin , it really falls under a contract category, vs a straight out gamble..
citations- how many do you want??

 

[RichKid]

citations- how many do you want??

Just the major ones, say the top six 'must reads'.
Thanks!

 

[mvander]

You can claim any expenses incurred that are directly related to earning assessable income. In some cases you may need to apportion expenses that have a private component. Eg computer expenses will usually have some private use.

Items to claim include, brokerage, calls to your broker, internet access for share trading ( may need to apportion), Tax advice related your share trading.

The ato has some specific rulings relating to deductions for share traders, when share trading is not the primary source of income. It may pay to review these.

My advice is to contact a specialist tax accountant and get yourself set up from day one. It will save you a lot of tax, will get you a few deductions and it is deductible.

 

[RichKid]

Hey Roofus,

Are you the person featured in the Personal Investor, January 2005 edition re tax classification of traders (ex-soldier, now multimillionaire 'gambler' fighting the tax office?).

The issues raised seem to be similar to what Roofus has discussed here, the article says the tax office won that battle.

BTW, do you have the citations to the cases you said you'd send me (see posts above)? Just asked out of curiosity so we can all have a look, you can post it on this thread.

Thanks!

 

[roofus]

richkid- yes that is me. I cant see anywhere where it says that the tax office won that battle?anyway.
If you want something to read, here you go
- http://law.ato.gov.au/atolaw/view.htm?find="gamble"&docid=JUD/33ATR1190/00001
- http://law.ato.gov.au/atolaw/view.htm?find="aat case 4847"&docid=JUD/20ATR3182/00001
- http://law.ato.gov.au/atolaw/view.htm?find="AAT CASE 6286"&docid=JUD/21ATR3728/00001
- http://law.ato.gov.au/atolaw/view.htm?find="AAT Case 6297"&docid=JUD/21ATR3747/00001
- http://law.ato.gov.au/atolaw/view.htm?find="share trading"&docid=AID/AID2001745/00001
- http://law.ato.gov.au/atolaw/view.htm?find="babka"&docid=JUD/20ATR1251/00001
- http://law.ato.gov.au/atolaw/view.htm?find="babka"&docid=JUD/20ATR1570/00001
- http://law.ato.gov.au/atolaw/view.htm?find="carbolic"&docid=JUD/*1892*2QBD484/00001
- http://law.ato.gov.au/atolaw/view.htm?find="CDS10036"&docid=ato/cds10036

 

[roofus]

cont.
- http://law.ato.gov.au/atolaw/view.htm?locid='JUD/37ATR167'
- http://law.ato.gov.au/atolaw/view.htm?find="gamble"&docid=JUD/*1925*2KB753/00001
- http://law.ato.gov.au/atolaw/view.htm?find="gamble"&docid=JUD/12ATR796/00001
- http://law.ato.gov.au/atolaw/view.htm?locid='JUD/20ATR922'
- http://law.ato.gov.au/atolaw/view.htm?locid='JUD/18ATR693'
- http://law.ato.gov.au/atolaw/view.htm?locid='JUD/9ATR873'
- http://law.ato.gov.au/atolaw/view.htm?find="gambling"&docid=JUD/*1925*2KB37/00002
- http://law.ato.gov.au/atolaw/view.htm?find="IT 2228"&docid=ITR/IT2228/NAT/ATO/00001
- http://law.ato.gov.au/atolaw/view.htm?docid=ITR/IT2655/NAT/ATO/00001
- http://law.ato.gov.au/atolaw/view.htm?find="babka"&docid=JUD/*1999*AATA1016/00002
- http://law.ato.gov.au/atolaw/view.htm?find="gamble"&docid=JUD/*1991*2AC548/00003
- http://law.ato.gov.au/atolaw/view.htm?find="gamble"&docid=JUD/49ATR1184/00001
- http://law.ato.gov.au/atolaw/view.htm?find="41 ATR 1042"&docid=JUD/42ATR504/00001
- http://law.ato.gov.au/atolaw/view.htm?find="TR 92/3"&docid=TXR/TR923/NAT/ATO/00001
- http://law.ato.gov.au/atolaw/print.... (betting))&docid=dtr/tr2004d17/nat/ato/00001
- http://www.directly2u.co.uk/carbolic/case.htm

 

[roofus]

cont.
- http://www.austlii.edu.au/au/cases/cth/HCA/1999/34.html
- http://www.murdoch.edu.au/elaw/issues/v2n2/kee222.html
- http://www.austlii.edu.au/cgi-bin/d...999/22.html?query=^+carbolic+smoke+ball#fnB10
- http://www.austlii.edu.au/cgi-bin/disp.pl/au/cases/cth/high_ct/140clr533.html?query=~+bidencope
- http://www.austlii.edu.au/cgi-bin/disp.pl/au/cases/cth/HCA/1982/8.html?query=~+ordinary+concept
- http://www.austlii.edu.au/cgi-bin/disp.pl/au/cases/cth/HCA/1972/31.html?query=~+ordinary+concepts
- http://www.austlii.edu.au/au/cases/cth/high_ct/82clr372.html
- http://law.ato.gov.au/atolaw/view.htm?find="hobby"&docid=CLR/CR200417/NAT/ATO/00001
- http://www.austlii.edu.au/cgi-bin/disp.pl/au/cases/cth/aat/unrep4103.html?query=^+21+atr+3747
- http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s124.390.html
- http://www.austlii.edu.au/au/other/ato/itr/it2228.html
- http://www.austlii.edu.au/cgi-bin/d...=~+martin+v+ federal+commissioner+of+taxation
- http://www.austlii.edu.au/cgi-bin/disp.pl/au/cases/cth/high_ct/120clr487.html?query=~+mcclelland
- http://law.ato.gov.au/atolaw/view.htm?find="21 ATR 3747"&docid=AID/AID2001746/00001#HIT5
-

 

[roofus]

- http://law.ato.gov.au/atolaw/view.htm?find="gambling"&docid=PAC/19360027/26AJ
- http://www.austlii.edu.au/cgi-bin/d..._ct/unrep3725.html?query=^+gambling+addiction
- http://www.austlii.edu.au/au/cases/cth/high_ct/81clr188.html
- http://www.austlii.edu.au/cgi-bin/d...M86/2.html?query=^+capital+gains+tax+gambling


yell out when your finished, there's a couple hundred more...

 

[RichKid]

Hi Roofus,

So it is you! Congratulations on being a successful (VERY successful, judging by the article) day trader- a rare species.

Also my humble apologies for saying the ATO won, I've looked at the article again and it looks like they withdrew their earlier ruling. Hope you win the next round, and the next .....

It's good that you are able to afford to take on the ATO as most people don't have the resources. (BTW, I'm not suggesting people shouldn't pay tax, but that it should be fair). Let's hope this helps to improve the clarity of our tax laws.

Thanks too for the references, I'll have trawl through them, let me know if there are one or two that are more important than the rest.

 

[roofus]

richkid- there isn't really any that stand out, you need to put them all together in the scheme of things. It is a true labyrinth once you start, its nearly like someone (ATO) designed it that way on purpose. But overall if you read the original submission that I sent the people that asked (cant remember if you got one,) it summarises things.

On that article, John did a good job but I was miss quoted in a few places, the $8million turnover is wrong, its more like 30. And I wasn't a battalion commander, I was 4th Battalion Commando. i think his shorthand let him down...

 

[roofus]

richkid- hows the reading going?

 

[RichKid]

Very slow! so much stuff, I'm no tax lawyer so it's taking time but it's good material, must have taken you years to get it all together. I'll keep you posted. Thanks again.

 

[roofus]

richkid-the above are only a selection of the cases Ive used, as I said there is about 100 odd more. It took me about 9 months to compile. Out of the 150 odd cases that total my defence, Ive had to read probably 6,7 times that amount to actually get the above citations, alot of the other 500 were really not of any use to me..
Anyway, I had my day in court yesterday, and the hard part now is waiting for a result. It will be atleast 2 weeks away.

In the meantime, does anyone that has followed this thread want to play Judge for a bit and give a decision on want the outcome will be?? Just for fun.

 

[doctorj]

Should the results be in your favour, it may serve as some benefit to many of us.

Good luck!

 

[RichKid]

richkid-the above are only a selection of the cases Ive used, as I said there is about 100 odd more. It took me about 9 months to compile. Out of the 150 odd cases that total my defence, Ive had to read probably 6,7 times that amount to actually get the above citations, alot of the other 500 were really not of any use to me..
Anyway, I had my day in court yesterday, and the hard part now is waiting for a result. It will be atleast 2 weeks away.

In the meantime, does anyone that has followed this thread want to play Judge for a bit and give a decision on want the outcome will be?? Just for fun.

As for a decision it depends on the evidence you've presented about your personal activities, ie how you trade, details of your trades etc. That'll have to be matched to the case law and prinicple, no decision without both those elements being compared.

I hope you do well as we do deal with randomness in the markets, did you use those theories to support your argument that what you are doing is betting on a mere chance? No matter how organised you are, if the markets are random you are just betting, as in roulette. you may win in this court case but they may restrict the decision to your case and not apply it as a precedent so we may not all benefit.

Keep us posted about the outcome, I suppose you may be able to appeal if it's not in your favour. Good luck and happy trading!

PS I don't think I'll ever get through all the links you've sent!

 

[markrmau]

Yes, please let us know how you get on.

The whole reason I asked this question is a little involved:

I was completing a PhD so not getting large taxable income. Partner was working. Partner gets pregnent with our 2nd child and gets morning sickness so bad that has to stop working. Partner had only earned $8k last year. Our total taxable income was in the reduction stage for family tax A.

So, if you know your family tax law, my partner was taxed: 16% for money over $6000 (threshold) 30% FTA, 30%FTB -> total 76% marginal tax rate (>$6k), 60% (<$6k).

Markrmau thinks that is rediculous and so gets partner to take out $75k margin loan, interest pre-paid.

So it is actually my partner who is calling the shots in these trades, and she is a very good trader it seems. So good that we may want to say that she is gambling...

 

[roofus]

richkid- I wont go into the actual evidence that I presented, (it took over 2 hrs) but you are on one of the paths.
markrmau- ah, that magic word gambling, I think we have something in common. I will let everyone know the outcome, as Im sure everyone will benefit if it is positive.