My parents are looking to buy something in USD with their AUD. They're selling their house and will eventually convert the proceeds from the sale of the house into USD.
However, in the mean time, they want to hedge against the AUD dropping against the USD. I suggested they go long the USD on margin. Then, when they've sold the house, they can close the position, and convert the result into USD for real to buy what they wanna buy.
There seems to be one problem with this idea to me though - the tax man would probably view any profit made in closing out the position as taxable income. But since it will be converted to *real* USD straight away (as opposed to an FX contract), there's really no profit being made.
I looked on the ATO website but I can't figure it out... the language they use is so difficult. Can anyone tell me whether this will count as taxable income?
Thanks
However, in the mean time, they want to hedge against the AUD dropping against the USD. I suggested they go long the USD on margin. Then, when they've sold the house, they can close the position, and convert the result into USD for real to buy what they wanna buy.
There seems to be one problem with this idea to me though - the tax man would probably view any profit made in closing out the position as taxable income. But since it will be converted to *real* USD straight away (as opposed to an FX contract), there's really no profit being made.
I looked on the ATO website but I can't figure it out... the language they use is so difficult. Can anyone tell me whether this will count as taxable income?
Thanks