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Uttsy

1,709 Posts.

200

16/08/17

22:59

Post #: 26547276
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Originally posted by kcheers ↑

I note who you were responding too. there seems to be some with tax advice from another planet. but my question to you is what benefit it would be to be classified as a trader? You pay the same tax regardless. I don't see any averaging scheme such as primary producers or IED that some can access.
Basically you add the profit to your other income if held under 12 months and anyone one would naturally seek the 50% discount if held longer than 12 months.

Just some basics and some are posting mis-info.
Usually income tax is paid at MTR (marginal tax rate) plus MCL (medicare Levee) on profits of trades held less than 12 months.
For some near retirement age, they may wish to retire early in a new FY if they were to be selling something with huge gains and not likely to be keeping for a year. (due to many reasons) Holding over 12 months allows you to reduce that profit by 50% and pay tax as per your MTR plus MCL.

Here is where some misunderstand and make errors. when selling a stock and you may have has numerous buys along the way. If none are over 12 months held (trades) but some may be close to 12 months. When you do sell, then you can place that trade against the most recent trade (which has the longest period to meet the 12 months). Some may trade (sell) in the exact number of shares of the last buy to counter that trade off. Thus you have not effected those close to achieving the 12 months.

Should you sell something that is entitled to the 50% reduction and you are carrying tax losses from other losses on trades then you will be wasting that 50% CGT discount and the full profit is used on the offset.

So just a little time to plan your activities and ensure that you are aware that holding some tax losses should be offset by profit trades that are held for the shorter periods. Once you can extinguish the carried forward losses and the current losses, then you get full mileage from the growth assets held over 12 months. Ie, get to pay tax on held the profit. Ie, there is no benefit of waiting 12 months for the GST discount if you are holding capital losses. You just wasted the potential benefit.

A above poster also seems unsure and I was a little confused about the whole message he wrote. But as he rightly states, he would be investing tax paid money on the trade and wants a tax deduction for the amount invested. My answer to that is that the original investment is of course not taxed on realisation of that trade. Only the profit resulting from it. I'm like our sheep shearer above, I enjoy paying tax and the more I pay the better I feel. I once hardly paid tax but couldn't really write a big cheque but now its all turned. Of course we should apply all legit deductions to ensure we don't pay more tax than required.
Currently I look after the centrelink payments for several recipients per year, I would like to support them better and pay enough to cover about 20 of them yearly. of course I would appreciate if my money was also used on education and infrastructure etc of course. But at least I feel they would really appreciate my efforts. each year I wait in vain for my thankyou letter from the ATO, or just a Christmas card would suffice. Some just no damn gratitude!!!

So Hoots, what benefits do you get being classified as a trader and do you loose benefits if you decided to have some long trades eligible for 50% discount?
Please all get professional advise and I disclose I am not an accountant but I have done formal tax studies for my own interests. ALL IMO

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Quick answer to your above, Id imagine the main advantage of running your business as a trader is almost a formalising of your income. If all you do is trade and have no other income, I doubt a bank etc would touch you based on a couple of years tax returns with nothing but capital gains to show. Formalising it as a business would make that process much easier.

Also if you're an out and out trader, holding onto a stock for 12 months isnt something they would normally ever consider.

AVZ Price at posting: 12.5¢ Sentiment: Buy Disclosure: Held
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