wash trade, page-4

HC is playing up today.



PC

Your activity sounds like one of a trader. For example, your IPO activity is not CGT but what is called 'isolated business transactions'.

Under CGT, you cannot claim any deductions apart from depreciation (unless you link those deductions to dividends, which for many deductions can be difficult).

Under CGT, you can include interest on borrowings in the cost base of your shares if they receive no dividends.

As a trader you can claim all deductions and also register for GST and received back 75% of GST on brokerage.

The greatest benefit of being a trader is you can adjust your closing stock at the end of the year to reduce your tax. Due to this, traders do not have to perform 'wash transactions'.

For example, for 2006 and 2007 I accounted for my shares as an investor. But in 2008 my tax bill as very large and in February 2009, if I had to pay my 2008 tax bill, I would have used 60% of my capital.

I applied to the ATO to be a trader. I reduced my 2008 shares income by 50%.

Better still, my 2009 shares losses are income or revenue losses rather than capital losses. This means my income for 2009 will be nil and I get all of my PAYGW tax refunded. After GST refunds, small 2006 & 2007 refunds and a big 2009 refund, my 2008 tax is fully covered.

If you have any more questions, just ask.

Kind regards

V