Tax (Evasion) Question

[skyQuake]

With the FY ending, tax and tax evasion is on all our minds; with that, I've been thinking about CGT and its 50% discount.

If today I were to open a Long on say 3yr Bonds, then force open a short at around the same price (thus completely hedged),

Wait till 30 Jun 2010, then dispose of the winning position (say longs), and claim my 50% CGT disc. Then re-enter longs, to re-hedge.

and on 1st Jul 2010, get out of shorts and claim the full capital loss.

Would that just be some free capital loss credits? Equal to 1/2 the total move of bonds during the time. (eg $100->CGT disc $50 gains; and full $100 loss)

 

[stoxclimber]

To get the CGT discount you need to have a real risk exposure over the entire period - e.g. you can't be long a stock and then short it for a period when you think it might fall to hedge your position.

 

[skyQuake]

To get the CGT discount you need to have a real risk exposure over the entire period - e.g. you can't be long a stock and then short it for a period when you think it might fall to hedge your position.

Do you have a link to that? cheers.

Also, what if you had put oppies on the stock?

 

[awg]

If you are doing this as a business or via CFDs, would not any profit or loss be treated as ordinary income anyway, no CGT to apply?

 

[gooner]

With the FY ending, tax and tax evasion is on all our minds; with that, I've been thinking about CGT and its 50% discount.

If today I were to open a Long on say 3yr Bonds, then force open a short at around the same price (thus completely hedged),

Wait till 30 Jun 2010, then dispose of the winning position (say longs), and claim my 50% CGT disc. Then re-enter longs, to re-hedge.

and on 1st Jul 2010, get out of shorts and claim the full capital loss.

Would that just be some free capital loss credits? Equal to 1/2 the total move of bonds during the time. (eg $100->CGT disc $50 gains; and full $100 loss)

skyquake

You mean tax avoidance which is legal - tax evasion is illegal and you can go to jail.

I am not aware of any rule in relation to risk when claiming CGT. However, assume your profit is $100. On 30 June 201) you trigger a capital gain, so at a 50% tax rate (make it easy) at 50% discount you will shortly have $25 going out the door to the taxman. On 1 July 2010 you can a capital loss of $50, but this has no value to you unless you have other gains to offset. So as far as I can see, you are worse off due to the tax payment not better off.

 

[Gillie]

skyquake

You mean tax avoidance which is legal - tax evasion is illegal and you can go to jail.

I am not aware of any rule in relation to risk when claiming CGT. However, assume your profit is $100. On 30 June 201) you trigger a capital gain, so at a 50% tax rate (make it easy) at 50% discount you will shortly have $25 going out the door to the taxman. On 1 July 2010 you can a capital loss of $50, but this has no value to you unless you have other gains to offset. So as far as I can see, you are worse off due to the tax payment not better off.

Totally correct gooner

The loss flows over to the following FY, where as your gain is in the previous. The loss will only be able to be offset against future CGT gains.

 

[Kez180]

Your CGT losses offset your CGT gains and then the 50% discount is applied...

Good thinking but no dice...

 

[skyQuake]

Totally correct gooner

The loss flows over to the following FY, where as your gain is in the previous. The loss will only be able to be offset against future CGT gains.

Thanks for the clarification gooner ..of course i meant avoidance!


So if you have developed a level of consistency, you could do this to potentially reduce your tax paid?

Your CGT losses offset your CGT gains and then the 50% discount is applied...

Good thinking but no dice...

Yeh that hurdle took ages to get through. Thats why we let the loss fall into yr2

And we assume yr1 is profitable

 

[Krusty the Klown]

The ATO disallows deductions of losses from straddle transactions on forex.

From what I have read it seems to be the same with futures.

So you may not be able to claim the loss as deductible but you can still get the discount on the profit made.

 

[skyQuake]

The ATO disallows deductions of losses from straddle transactions on forex.

From what I have read it seems to be the same with futures.

So you may not be able to claim the loss as deductible but you can still get the discount on the profit made.

Cheers, looks like i'm on thin ice here lol
gonna do a bit more research on the ATO website

 

[Krusty the Klown]

Just to be totally anal about it - avoidance and evasion are both illegal.

The word you are looking for is "minimisation", it's nice and politically correct.

 

[Krusty the Klown]

Cheers, looks like i'm on thin ice here lol
gonna do a bit more research on the ATO website

Look for "taxation ruling IT2228", that deals with futures.

Thin ice???? It shows you are looking for that edge!!!!!!!

 

[Cartman]

Cheers, looks like i'm on thin ice here lol
gonna do a bit more research on the ATO website

Thin ice is nice,

maybe once maybe twice,

If you are third time caught

it might be a rort,

You will do your doe

cause the tax man doth know.

He's a pain in the @rse

with a heart of glass.

He's got your number,

your trading will slumber.

Buy a takeaway instead,

It will keep you fed.

And when the stock market crashes,

You'll know where your cash is !!!


(Hamburgers are the future of the world ----- just ask that guy, Mick Donald)

 

[awg]

made me curious

dont know whether this will help or confuse

http://www.asx.com.au/products/pdf/taxation_futures_dec_03.pdf

 

[Krusty the Klown]

made me curious

dont know whether this will help or confuse

http://www.asx.com.au/products/pdf/taxation_futures_dec_03.pdf

That is quite interesting....

I like page 12 - possible ATO "lines of attack" - does that mean taxpayers are the enemy???????