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bx6EF1(Newbie)Newbie
6 Aug 2024

Hi,


I am considered a share trader for my share transactions and am operating as a business with an ABN. I am going through my transactions to calculate the COGS and business income but needed clarification on how to recognize the brokerage costs. I am including the brokerage in the cost base for the shares as trading stock in my transactions however how do I include the brokerage costs in the sale of the shares? Do these also form part of the cost base as in a CGT calculation? For example purchasing 100 stock of ABC at $1 with $5 brokerage and selling for $1.50 with $5 brokerage:


Cost: (100 * 1) + 5(purchase) + 5(sale) = $110

Revenue: (100 * 1.5) = $150

Net income: 150 - 110 = $40


Would this be the correct approach? If so, how do I account for brokerage in the closing stock of my shares as they have not been sold yet so no brokerage has been incurred?


Thanks

1,973 views
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1,973 views
1 replies

Most helpful response

Most helpful reply

Matt_ATO(Community Support)Community Support
9 Aug 2024

Howdy @bx6EF1,


When you purchase shares, you should include the brokerage fee in the cost base. For example, buying 100 shares at $1 each with a $5 brokerage fee would result in a total cost of $105.


Similarly, when you sell shares, you should include the brokerage fee in the cost of the sale. For example, selling 100 shares at $1.50 each with a $5 brokerage fee would result in a net sale amount of $145.


For shares that have not been sold yet, you only include the purchase brokerage in the cost base of your trading stock. The sale brokerage will only be accounted for when the shares are actually sold.


As a share trader, your shares are treated as trading stock, and the costs (including brokerage) are deductible in the year they are incurred.

All replies

Most helpful reply

Matt_ATO(Community Support)Community Support
9 Aug 2024

Howdy @bx6EF1,


When you purchase shares, you should include the brokerage fee in the cost base. For example, buying 100 shares at $1 each with a $5 brokerage fee would result in a total cost of $105.


Similarly, when you sell shares, you should include the brokerage fee in the cost of the sale. For example, selling 100 shares at $1.50 each with a $5 brokerage fee would result in a net sale amount of $145.


For shares that have not been sold yet, you only include the purchase brokerage in the cost base of your trading stock. The sale brokerage will only be accounted for when the shares are actually sold.


As a share trader, your shares are treated as trading stock, and the costs (including brokerage) are deductible in the year they are incurred.

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How do I account for brokerage costs in a share trading business? | ATO Community