AUD FOREX Traders

Hi there, i was just wondering if you AUD based forex traders could tell me how the tax on our trades works in Australia?

id also be interested in this as this upcoming July will be my first end to a financial year where i forex traded...

It's just income tax

but if you have a usd account do u base profits and losses(for income tax) on the amount you withdraw back to your australian account and hence that current rate, or is it based upon the audusd rate at the time of every trade?

^ what he said.

Also, do i have to set it as income tax? what if i say, never payed the tax on my withdrawals? Hell, what if i withdraw it into an offshore account or something in another country. (This is all hypothetical, i don't nearly have a large enough trading portfolio to even fathom all this, but AUS has some pretty heavy tax...)

I'm not an accountant, this is what I'm told by mine. How much you make per year is what is taxed (not how much you withdraw). You need to convert your USD account balance to AUD on the last financial day of the year. I advise for simplicity to have your account based in AUD, I know my US broker does that so yours may too.
Note, that if you make less than a thousand dollars and have a full time job you can probably claim it as a hobby which might be tax free. This goes for losses too, unless you can claim that it is a serious business, your loss won't come of your nominal tax rate. A few years ago people doing Amway and similar schemes would crank up huge expenses (buying cars etc) and make a loss on their "business", then offset that against their regular income. The Tax Office clamped down on this, quite naturally.

EDIT: You can manage your own super fund and have that hold your trading account so it will be virtually tax free. Though this means you won't be able to access it until you are sixty.

http://www.ato.gov.au/corporate/path...60#001_009_015 is the website for Australian based taxing on Foreign Exchange. However, with all the jargon you need an accountant to understand it. It is not the same as personal income tax. The ATO calls bases your taxable income from the different "realisation events". There are 4 different realisation events, of which a number of them could apply to us. Each of them are taxed differently, but you only get taxed by one of them at any time. Hence you can really minimise your tax if you have an accountant that knows what s/he is doing.

To get the best tax return you would need to see an accountant.

what happens if i don't pay any tax on my forex trades?

Indeed
I've even been told by one accountant that if you can calculate how much spread you have paid for then you can offset that as a business expense. It might be difficult though...
I think for small traders a normal accountant would be fine, but if you are living off your trading then I'd certainly be looking around for a specialist.

Forex does not change the consequences for not paying taxes. When caught, you will be required to pay all the taxes and will often receive either a warning (if it is small amount of tax) or very hefty fine on top of the tax that would easily surpass the tax that you should have paid in the first place.

Deliberate avoidance of tax can result in a gaol sentence.

I hope that this thread still has some life left.

Just wondering if anyone knows if your forex trading needs to be identified as a 'bisiness' for tax purposes.

Cheers and thanks

[quote=Ezzy;3462188]Just wondering if anyone knows if your forex trading needs to be identified as a 'bisiness' for tax purposes.
/quote]

Hi Ezzy...My F/A says up to 50K can be claimed as hobby
but....if you have already been claiming expenses then no go...

Australia one of the highest taxed nations in the world...no wonder we want to leave....and take our hard earned dollars with us...to do good where most appreciated

Yes you need to pay tax (or claim a loss as a deduction) on your YEARLY GROWTH. Most forex brokers should either send you a YTD report (much like a group certificate) or you can print it off through the platform (as a summary).

You pay tax dependant on your personal circumstances. So if you have made gains this year and not paid any tax on them then get prepared to pay the amount dependant on your threshold, and also be aware that the income derived from trading may push you into the next threshold which means a WHOLE lot more tax

If you are trading a large account along side another job then it might be wise to talk to a tax accountant before the end of the tax year. There may be options for you to place the income under a business which has a number of options. If you have a family with young children then the best option maybe to set up the company as a family trust. This would allow you to distribute the earnings amoungst the family up to the tax free threshold of $6000 which would save you a bulk of tax. There maybe limitations to this and since I am not an accountant I can only tell you what I believe to understand HENCE the best option is to talk to someone.

If you dont pay tax on it no problem. Just hope you dont get audited and if you do hope that your account is setup under an alias that isnt linked to you or any of your accounts<---------- joking..... If you dont pay tax then you will stand to face the full force of our relentless government to SQUEEZE every penny out of you, then they will probably fine you a good amount just for laughs.

If you make a loss CLAIM IT, I cannot stress that enough. You can claim it as a loss against your income and perhaps get something back for your recklessness ROFL.

Yes this is a beautiful country and YES we get screwed so if you are making a good income as a trader then consult with someone as to HOW you can LOWER your exposure and MAXIMISE the reward for the EFFORT YOU HAVE PUT IN. This is more or less a business so that is 1 very viable avenue that has alot of offsetting perks.

Razor