Which accountant do you vouch for?

[RobinHood]

With the end of financial year coming up I'm beginning to look for an accountant to do my returns. I'm a student with gains from various sources (mainly CFD's, futures) apart from work this year, but also with losses (trading futures) vastly exceeding those gains. My fear is having to pay tax on gains which no longer exist. Should I be going to some basic local accountant?, as an expensive accountant specializing in trading would be totally unjustified in my case.

Where do the rest of you go? any recommendations on where to look?

 

[Trembling Hand]

If I was in your situation I would do it myself. Always good to know how that side of your business works and no better way than to do it yourself.

From my experience the run of the mill accountant has a brain meltdown when you hand them a P & L from trading. For some bizarre reason they never want to apply normal biz and tax rules to them And for good ones car, who know what they are doing you will not be able to afford them :

And as a sole trader with a first up year loss you will not be paying tax.

of course DYOR

 

[rub92me]

Don't think you need an accountant for that. Just look up the ATO site for the rules. It is only a gain/loss for a trade from a tax perspective when you close a position. Your broker(s) should be able to give you the list of all closed trades in the tax year. Just plonk them all in a spreadsheet. If your net P&L is negative from all these trades you won't be paying associated capital gains tax.

 

[Kez180]

Lol some of you guys must be going to H&R Block or the equivalent...

I work at a small accounting firm (Less than 20 Staff) and many of our clients trade volumes of shares...

We charge around $160/hour for individual tax returns... depending how many trades you have I can't imagine it taking more than 3 hours to do the whole return...

I did the CGT worksheet on a stock broker with 3 different HINs and 5 pages of trading statements on each... That took me 3 hours....

Odds are that the trades will be capital in nature and not revenue and as such you will not be able to offset it against your normal income... this will depend on your individual circumstance...

Any decent accountant will be able to look after you...

~Kieran

 

[Taltan]

If your financially/computer literate you should probably do it yourself. There won't be any tax on the trading as you have more losses than gains.

If you do go to an accountant, in your case the tax laws will be the same whether they're big or small so definately don't pick an expensive one (of course your welcome to PM me and I'll do it for you). As Kez180 said any decent accountant will be able to look after you

 

[Trembling Hand]

Lol some of you guys must be going to H&R Block or the equivalent...

We charge around $160/hour for individual tax returns... depending how many trades you have I can't imagine it taking more than 3 hours to do the whole return...

I did the CGT worksheet on a stock broker with 3 different HINs and 5 pages of trading statements on each... That took me 3 hours....

Odds are that the trades will be capital in nature and not revenue and as such you will not be able to offset it against your normal income... this will depend on your individual circumstance...

This is exactly my point of why accountants lose their brain when it comes to traders. Their default position is CGT.

If I had a coffee shop would you ask for documentation and P&L on every latte' I sold?

 

[SoBadAtTrading]

Interactive Broker's statement does not take into account P & L for forex trades. It does a good job with stocks and futures. So how does one calculate p & l for fx trades then as they are counted as cash transactions.

 

[Bushman]

This is exactly my point of why accountants lose their brain when it comes to traders. Their default position is CGT.

If I had a coffee shop would you ask for documentation and P&L on every latte' I sold?

Not surprising that. The ATO have put out a memo that they will be cracking down on 'traders' taking a tax write-off on trading losses in the bear market.

Accountants as a rule do not want to mess with the ATO and the ATO is revenue hungry at the moment.

See page 3 of today's AFR.

 

[cutz]

So how do you guys present you years trades to the accountant, as one total profit amount or as a spreadsheet with all the individual trades?

Reason I ask is last financial year my accountant preferred to enter all the individual trades from my spreadsheets onto the system, I would have preferred to present a total for the year ( short term trades only).

Can't see what difference it makes, still pay the same tax on both methods.

Any thoughts ?

 

[awg]

So how do you guys present you years trades to the accountant, as one total profit amount or as a spreadsheet with all the individual trades?

Reason I ask is last financial year my accountant preferred to enter all the individual trades from my spreadsheets onto the system, I would have preferred to present a total for the year ( short term trades only).

Can't see what difference it makes, still pay the same tax on both methods.

Any thoughts ?

I have a thought.

The longer method justifies charging a lot more.

The accountants seem to insist on checking every transaction

It is probably due to their Indemnity requirements IMO

There are several accountants on ASF, so they may be able to say.

but if u do your own return.

the bottom line is all that counts.

if u get audited, just make sure you have all the transactions notes and spreadsheet entries

then just give it to them and say.."check this"

 

[Trembling Hand]

I have a thought.

The longer method justifies charging a lot more.

The accountants seem to insist on checking every transaction

It is probably due to their Indemnity requirements IMO.

Yes I would like to hear why as well. Its absolute nonsense.

If you are carrying on a business, any other business, they do not ask to check every transaction.

I guess its cuz accountants have very very tiny brains : even smaller than a traders

 

[cutz]

if u get audited, just make sure you have all the transactions notes and spreadsheet entries

then just give it to them and say.."check this"

Yeah, i like it.

 

[awg]

My affairs require an accountant.

He is worth what I pay him

I start with a file about 6 inches thick.

work that down to a 1 inch file

the accountant gets a 1cm file

takes me about 20hrs.

(fortunately my trading SMSF is FULLY AUTOMATED via electronic reconcilliation and costs $600 flat, even if I do 1000 trades...that is totally separate tho)

I keep a fat file of all my buy/sell/ and chess notes in chronological order.

I know for a fact that you used to be able to make an apt at the ATO, rock up, and they must help you complete yr return.

My personal accountant is very cautious about being sued, due to mistakes.

The trading/investing is gray..I would get a ruling, if dubious, which it is if you have a paid job as well, depending on other matters to.

If you know what classification you fall under, and can work it all out yourself, that is the best way, especially if you are a trader, too easy

 

[Gillie]

Think i'll just ignore "TremblingHands" comments, I'm of both worlds... LOL

Myself being an accountant/broker, you quite often see that clients don't keep very good records. We always have clients' accountants ringing us for this report or that report.

IMO i believe if you can't keep good records then why are you investing and why have you got all this money?How have you kept track of it?

Good work AWG, like your style....

 

[awg]

Think i'll just ignore "TremblingHands" comments, I'm of both worlds... LOL

Myself being an accountant/broker, you quite often see that clients don't keep very good records. We always have clients' accountants ringing us for this report or that report.

IMO i believe if you can't keep good records then why are you investing and why have you got all this money?How have you kept track of it?

Good work AWG, like your style....

Hi Gillie,

You have the cloak of anon here brother.

I think we all agree, that immaculate records need to be retained.

Would you be so kind as to offer an opinion on whether Indemnity is the primary reason most Accountants insist on individual reconciliation?

Seeing that you are here and all

 

[voyz]

may be a silly question but how much tax do u generally pay on your trading income? if i make 70k a year on my day job will the money i made in the market say it 15k put me in a higher tax braket or anything? how can u be eligible to classify yourself as a trader and make deductions for a trading business?

 

[Gillie]

Sure not a prob....

I wouldn't say that it is not the primary reason, but there is strong reasoning behind it to be in the top 3. Firstly, the client minimises their expenses if the accounts are ordered and straight forward, by saying to the client this is going to minimise their expense is also a good way to retain future business as well - nothing worse than turning up to your accountant with a shoe box full of receipts - had that done.... Secondly, Prudence & Materiality - easy to find erroneous items when ordered individually. Thirdly, I would put Indemnity; nothing worse than receiving a stage 3 Audit request from the ATO. (Stage 3 Audit is when you are requested to attend an interview with the ATO in person and present all your documentation - had this with a client once).

In the last few years there have been several high profile cases where people have had tax advice from accountants relating to equities and derivatives, and the advice has erred in some way or another. And, due to the large premiums involved for the accountants Indemnity Insurance you can now see why they are a bit cautious - and the settlements of course - I know if we had the choice we would always settle out of court.

One that i was involved with 3 years ago, with another company, was to do with a super fund (can't go into too much detail) they were trading derivatives and made heavy losses through doing it. The trustees subsequently came back and said that the account was mismanaged and we erred on advice regarding the derivatives. But, It was found by the courts that the company was only in 10% error and the client was 90% liable, as we followed the practise of the investment portfolio, trust deed and client directions. The only thing the company was found to be liable for was the size of the transactions - even though these were confirmed with the client(s).

 

[Bushman]

:

Myself being an accountant/broker,...

An accountant, a broker and you played test cricket for Australia?

 

[cutz]

Hi Gillie,

So as an accountant and assuming a trader keeps immaculate records, do you you want to see a spreadsheet containing hundreds of opened and closed trades ( thousands in the case of some guys here) or do you prefer just to have a total for the financial year for entry into the ATO system ?

 

[awg]

Yes I would like to hear why as well. Its absolute nonsense.

If you are carrying on a business, any other business, they do not ask to check every transaction.

I guess its cuz accountants have very very tiny brains : even smaller than a traders

Surely yrs is not done transaction 1 at a time TH?

Sure not a prob....

I wouldn't say that it is not the primary reason, but there is strong reasoning behind it to be in the top 3. Firstly, the client minimises their expenses if the accounts are ordered and straight forward, by saying to the client this is going to minimise their expense is also a good way to retain future business as well - nothing worse than turning up to your accountant with a shoe box full of receipts - had that done.... Secondly, Prudence & Materiality - easy to find erroneous items when ordered individually. Thirdly, I would put Indemnity; nothing worse than receiving a stage 3 Audit request from the ATO. (Stage 3 Audit is when you are requested to attend an interview with the ATO in person and present all your documentation - had this with a client once).

In the last few years there have been several high profile cases where people have had tax advice from accountants relating to equities and derivatives, and the advice has erred in some way or another. And, due to the large premiums involved for the accountants Indemnity Insurance you can now see why they are a bit cautious - and the settlements of course - I know if we had the choice we would always settle out of court.

One that i was involved with 3 years ago, with another company, was to do with a super fund (can't go into too much detail) they were trading derivatives and made heavy losses through doing it. The trustees subsequently came back and said that the account was mismanaged and we erred on advice regarding the derivatives. But, It was found by the courts that the company was only in 10% error and the client was 90% liable, as we followed the practise of the investment portfolio, trust deed and client directions. The only thing the company was found to be liable for was the size of the transactions - even though these were confirmed with the client(s).

My AC was telling me of a firm that got sued, caused they incorrectly calcd GST, meaning the client didnt sell other stuff to balance out, and had to pay $350k tax.

He sued, but they did not settle, he had to go all the way, and won in court.

Derivatives in SMSF is a pot of poison in some ways, if too many blow up, the ATO will probably do something