Can someone help?I saw my tax man the other day and he asked if...

Can someone help?

I saw my tax man the other day and he asked if i wanted to be seen as a trader -and therefore reduce capital gains tax and trading costs when buying and selling regularly.

I told him that I'm more of an investor -I'm sitting on quite a bit of capital gains and I don't want to trigger CGT and therefore don't want to sell -just enjoy the divies

however when the market was range trading or going down i was trading 2-3 times a day. I've now stopped trading as the market has been moving up.

My accountant said to me you can be both -trader and investor -keeping things separate - but it can be tricky -this would suit me as I know how to make money trading -simply buy top businesses that have been thumped by bad news (or fundamentally undervalued)but thumped undeservedly so -let them recover then move on to another company.. -and then keep my long termers separate.

How would I go about doing both? I feel i can make money both as a trader and an investor? but i don't want to be taxed to the eye balls

I have a bell direct account for my companies I'm holding long term. If I opened up another account say with comsec or some other on line trader and only use that account for trading - and only trade the investment account occasionally -would this work? In this way I would be keeping things separate and therefore keep the tax man happy -would I therefore be seen as a trader with comsec and therefore get the tax benefits of being a trader and also the tax benefits of being an investor with bell direct? Any thoughts are most welcome.

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Trader:
* receipts from the sale of shares are income
* purchased shares would be regarded as trading stock
* costs incurred in buying or selling shares are an allowable deduction in the year in which they are incurred, and
* dividends and other similar receipts are included in assessable income.

In the case of a share holder:

* the cost of purchase of shares is not an allowable deduction – it is a capital cost
* receipts from the sale of shares are not assessable income – however, any net profit is subject to capital gains tax
* a net loss from sale of shares may not be offset against income from other sources, but may be carried forward to offset against future capital gains made from the sale of shares
* costs incurred in buying or selling shares are not an allowable deduction in the year in which they are incurred, but are taken into account in determining the amount of any capital gain
* dividends and other similar receipts are included in assessable income, and
* costs incurred in earning dividend income – such as interest on borrowed money – are an allowable deduction at the time they are incurred.