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Day Trader’s Aftermarket Lounge 6 Aug 2020, page-32

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Veritas2000

12,925 Posts.

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06/08/20

18:19

Post #: 46357152
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Originally posted by juliarrr199: ↑

The answer to your question as with all legal questions is... it depends.

I will break this down as simply as I can. This is not legal advice simply a restating of freely available information on ATO etc. I will say if you are curious but unsure, google ato CGT + trading as a business info and read everything.

See an accountant or tax lawyer.

Two options:

1. CGT (no abn)(many steps to process so I will simplify)
Gain gets calculated EOFY in an asset register. Losses get calculated. Then total losses will be added to offset the net gain. The total net gain will be added to an individuals taxable income and then they will be taxed in accordance with that total income bracket for the year. UNLESS, you held the asset for over a year which will automatically be taxed at 25%. So it is impossible to calculate how much that theoretical gain would be taxed with the current information provided.

2. Trading as a business (requires abn) (this depends if the business is a sole trader, partnership, corporation they are taxed slightly differently)
The example would only be taxed as taxable income relative to the tax bracket that income falls into if that is income to the individual or entity and not used/ expended in another way for the running of the business. Income is profit - expense. So you can offset cost of other shares, other business expenses like platforms, data etc if it falls within the taxation law (there are specific requirements here like costs of certain types of expenses and evidence as to how it is used in the business etc). This is because shares = trading stock to run the business.

However, in your example you are essentially saying you can take these risks and then any losses will minimise your taxable income so the tax man is paying for it. Well not exactly, the tax man is paying the percent you would otherwise be paying in tax on that money but a loss is still a loss.

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Hi Julia,

Another component in classifying as a "share trader " is that the number of transactions per financial year must be 40 or greater.

V
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