Australian Taxation of Forex

[Khybee]

Hi,

Does anyone know about how Forex is taxed in Australia? Would it be when a trade makes a profit or when any profits are withdrawn from the trading account? If anyone know of a good website explaining it please can you post a link.

[Nick]

Hi,

Does anyone know about how Forex is taxed in Australia? Would it be when a trade makes a profit or when any profits are withdrawn from the trading account? If anyone know of a good website explaining it please can you post a link.

My understanding after speaking with my accountant was that you only pay tax once you withdraw from the account.

But you should probably check with your own accountant to confirm.

[Isochronous]

Or setup an account in HK and pay no tax because capital gains are not taxed there!

[Khybee]

Or setup an account in HK and pay no tax because capital gains are not taxed there!

Does this mean that profits are taxed as Capital Gains in Australia & not income? If you set up a trading account in HK although HK may not have Capital Gains wouldn't Austraia still see it as an overseas income though?

[optionmagic]

Does this mean that profits are taxed as Capital Gains in Australia & not income? If you set up a trading account in HK although HK may not have Capital Gains wouldn't Austraia still see it as an overseas income though?

Yes if they find out maybe from deposits into your account??, better off having offshore broker that doesnt report to ASIC and transfer via offshore accounts im guessing

[Big River Man]

Guys I'm not a accountant but for sure I know that this is true. You make money ANYWHERE, then they want a piece. It don't matter if you in USA, Cyprus or Australia, the ATO wants to know. They only way they are gonna know is if they audit you. If you get audited then they will trace those large deposits. Best to get some professional advice about it.

Also most forex trading will come under the "trader" umbrella and not the "investor" umbrella. Thus its income not capital gains. Another thing where maybe you could circumvent that would be if you were in a MAM. Anyway the way that I see it you are better off being regarded as a "trader" as you can claim commissions, home office, computers and all that shit.

As far as only counting it when you withdraw?.....I don't know about this. But I would assume that it would be your balance as of 30th June which is the opposite of what Nick says. Huge difference. Personally I prefer Nicks accountants approach!!

[jdl]

Guys I'm not a accountant but for sure I know that this is true. You make money ANYWHERE, then they want a piece. It don't matter if you in USA, Cyprus or Australia, the ATO wants to know. They only way they are gonna know is if they audit you. If you get audited then they will trace those large deposits. Best to get some professional advice about it.

Also most forex trading will come under the "trader" umbrella and not the "investor" umbrella. Thus its income not capital gains. Another thing where maybe you could circumvent that would be if you were in a MAM. Anyway the way that I see it you are better off being regarded as a "trader" as you can claim commissions, home office, computers and all that shit.

As far as only counting it when you withdraw?.....I don't know about this. But I would assume that it would be your balance as of 30th June which is the opposite of what Nick says. Huge difference. Personally I prefer Nicks accountants approach!!

I agree with this. I'd like Nick's accountants approach but would ensure any advice was written. And trading offshore without declaring is just hoping for no audit.

Whilst this isn't directly from the ATO it is a quite detailed. http://www.mrtaxman.com.au/blog/fore...rrency-trading

[Isochronous]

That website suggests Australian tax applies once trades are closed not when withdrawals are made.

Also what's the $20k rule in regard to turnover and tax deductions? Something to do with being able to deduct losses once you turnover that amount. Also, is this the threshold that allows tax deductions for costs, e.g. laptops?

[jdl]

Yes I think withdrawals are irrelevant.

[Cartmanizm]

My understanding after speaking with my accountant was that you only pay tax once you withdraw from the account.

But you should probably check with your own accountant to confirm.

I highly doubt that Nick. I know that the ATO would have tax applicable on realized and unrealized gains/losses on simple things even such as international banking account balances so I'm sure forex would be treated the same.

[Khybee]

Reading Mr Taxman it certainly looks like it is based on net profit or loss as at 30 June. So it would appear that prior to 30 June is a good time to close off losing trades that you don't think are going to recover!