Taxation

[emma]

Thanks Stinger for your reply.

 

[rocket_science]

emma,

I have a relative who works for the ATO. My suggestion is to speak to an accountant who specialises in tax or to the ATO directly to confirm any advice you get.

At the end of the day it's the ATO that decides if a person is a trader or investor based on the information the person provides them. Make sure any info you give the ATO is accurate

good luck

 

[maffu]

17. hedge some holdings and if the hedge loses claim it

Lol that is awesome, i never knew that was possible.

Does it work like this?
So if i buy 1,000 shares at $50.00
Buy a put contract over the shares strike price at 50.00
If the share moves to $60.00 i can claim the hedge as an expense to lower my tax, making the premium paid essentially much cheaper.

If the share drops to $40.00 i can exercise the put, sell my shares at $50.00 and only lose the premium?

 

[JAK]

Hi all, apologies if its been covered elsewhere...... looked !

If I sold some shares today, which I held for less than 12 mths, and made say a $600 loss and have no gains to offset against, during this financial year, other than dividends, how would the ATO allow me to treat this loss come Jun07 ?

In other words, do I have a reasonable chance of claiming the entire amount ? ( I want to get some idea of possibilities, before I call ATO)

Your comments would be most appreciated..........

 

[Ferret]

You can only use it to offset a capital gain. If you dont have capital gains this year, you still report it and it carries through to next year or whenever you have a capital gain to offset against.

Ferret

 

[Space Cadet]

capital losses can only be offset against capital gains but capital losses can be carried forward indefinitely.

Also, if you have a capital gain from another asset classs - example property - then you can offset your capital losses from shares against capital gains from property.

As always, best to confirm with your own tax agent or ATO directlly for your particular circumstances.

 

[GreatPig]

Jak,

There are a couple of assumptions in those replies:

- that you're classified as an investor and not a trading business.

- that the loss is not in a family trust subject to the trust loss provisions.

GP

 

[JAK]

OK, I get the picture, thanks

IF I said my intention was to make some profit by trading a small volume of trades, using ETrade, my own computer, analysing the market etc....
but still had a day job that has nothing to do with share market, would that pass as a share trader ?

Thanks JAK

 

[Duckman#72]

OK, I get the picture, thanks

IF I said my intention was to make some profit by trading a small volume of trades, using ETrade, my own computer, analysing the market etc....
but still had a day job that has nothing to do with share market, would that pass as a share trader ?

Thanks JAK

Hi Jak,

The ATO looks at a mumber of issues to determine whether you are in business as a trader or as an investor. There is not factor that classifies you as one or the other. Fair to say that the following factors are taken into account:

a) Amount of Capital involved
b) Your experience and expertise in the field
c) Amount of time spent on the activity
d) Likelihood and intent of making a profit
e) Repition and regularily of the transactions
f) Books and records kept in a business like manner.
g) Business plan kept and set methodology for trading.

The fact that you have another job doesn't mean that you are automatically classified as an investor and vice versa.

Duckman

 

[JAK]

Much wiser now, thanks all for your advice

Much appreciated, JAK

 

[Fab]

I am wondering in which account it is better to trade my share.
I have a company account, a family trust account and a commsec account.
Tax wise I understand it is better to do the trading under the lower income earner in that case my wife.
Company account are not good for shares trading in my understanding as they don't get the same benefit as personal share trading account.
What I am wondering is if I transfer my shares to the company trust would it be more tax effective as I potentially could re-distribute profit as dividend to the people associated to the family trust.

Can anyone advise on this ?

Cheers

 

[Stinger]

I would trade through your family trust if you are making capital gains as these can be distributed to any beneficiaries in the most tax effective way. You dont actually distribute dividends from a trust, all income keeps its character when distributed to beneficiaries ie capital gains will be distributed as capital gains, dividends as dividends etc.

Just watch transferring your shares from the company or your own account to a trust though, as you will be hit by CGT as the legal owner has changed.

 

[Fab]

Thanks for your reply Stinger.
Do you happen to know if I can create a commsec account under my Family trust name ?

 

[Stinger]

I dont use commsec but i dont see why not. I am sure its a very common thing. Will probably need to fill out all the forms again etc

 

[Sir Burr]

Hi,

Interesting topic tax!

I'm wondering, I trade in the name of family members name where I pay a tax rate of 30%.

If I get to the stage where profits creep into the next tax brackets, is there another way?

Thx SB

 

[Stinger]

Trade within a company where the rate is fixed at 30%, however you have to pay top up tax when you distribute any income as dividends.

 

[Fab]

Stinger,

My understanding was that company where not treated the same way with regards to CGT .

 

[Sir Burr]

Trade within a company where the rate is fixed at 30%, however you have to pay top up tax when you distribute any income as dividends.

Thanks Stringer, what's "top up tax" ?

I'm guessing but does that mean if a family member earns money and the "company dividends" take them over the magic 30% bracket, then they pay the next tax bracket? Is this the "top up"?

If that is the case then a benefit in this might be to "distribute any income as dividends" between family members upto their max 30% and if possible hang onto to other profits until a later year?

SB

 

[Sir Burr]

One other question, do people record the date they buy the stock or T+3 in their taxation records?

SB

 

[123enen]

You should record the day that you buy the stock. Contract date.
That is the day that the RISK and obligation is passed on to you. Does not matter that you pay 3 days later.(or receive money 3 days later)