Tax Implications - Trader Vs Investor, 30469018, page-26 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by ddzx ↑

hi @squeef

lol... i am a little rusty. taking a while for my memory to return

ordinary deductions (for computers, phones, rent, electricity, etc) can only be claimed against 'share trading income' & 'dividend income' because the CGT rules only allow capital gains & capital losses to be offset with certain 'Incidental Costs' (section 110-35) which do not include depreciation (for computers, phones), rent, electricity, etc. Also, CGT interest costs are only allowable when there is a capital gain (section 110-25(4) ). In other words, when there is a capital loss, section 110-55 does not allow interest costs to form part of the CGT 'reduced cost base'

therefore, if you don't have lots of dividends but invest for capital gains on speculative shares, you cannot claim or offset ordinary costs such as depreciation (for computers, phones), rent, electricity, etc.

if you earn dividends or are a share trader, you can claim apportioned rent expenses when you are able to show that, as a matter of fact: (i) there was no alternative place of business to do your share trading; (ii) it was necessary to work from home and (iii) that the room in question was used exclusively or almost exclusively for income producing purposes (TR 93/30)
.
i think for dividends it might be very difficult to demonstrate a 'nexus' or 'connection' with rental expenses, unless you have a very large portfolio requiring lots of work to maintain

but as a 'share trader', if you are spending 7 hours on the ASX daily plus doing research & use the room mostly or only for share trading then it is very easy to to demonstrate a 'nexus' or 'connection' with rental expenses

the following documents contain the above info:

1. Dividend Income deductions: ATO booklet 'You & Your Shares' is here: https://www.ato.gov.au/uploadedFiles/Content/IND/Downloads/You and your shares 2017 PDF.pdf

2. CGT incidental costs: https://www.ato.gov.au/law/view/document?docid=PAC/19970038/110-35

3. CGT interest expense for 'cost base' of 'capital gain': section 110-25(4) https://www.ato.gov.au/law/view/document?docid=PAC/19970038/110-25

4. not allowable CGT interest expense for 'reduced cost base' of 'capital loss': https://www.ato.gov.au/law/view/document?docid=PAC/19970038/110-55

5. Home Office Expenses: https://www.ato.gov.au/law/view/print?DocID=TXR/TR9330/NAT/ATO/00001&PiT=99991231235958

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Hi ddzx,

While trying to find out about tax for traders I've seen your posts and find them really helpful.
I'm still trying to get a bit more info on the subject, is there a good webstite or resource you can point me to?
I read somewhere the Master Tax Guide can be a good read, not sure if they talk much about stock trading, I've also seen there's a book called Australian Practical Tax Examples, would you recommend these?

Also, if trading is my second income where do I put this when filling out my tax return?
Would it be classified as a small business?