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Re: Share Trader & GST

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KaZ
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If I carry business as a share trader (not as a share investor) and have a turnover of more than $75,000, do I need to register for GST?

Since buy and sell shares consider as financial supplies (input tax supplies) I believe we don't need to register for GST even turnover is more than $75,000. In that case, if we don't need to register for GST, still can I choose to register for GST and can I claim GST portion of Brokerage fee, Internet (business %), New computer (business %), etc... as GST credit? Appreciate expert advice. Thanks!

 

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Devotee

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Hi @KaZ

 

Thanks for your question! You're right - share trades are considered to be input-tax sales, which are sales of goods and services that don't include GST in the price. You can't claim GST credits for the GST included in the price of your 'inputs'.

 

However, a share trader can choose to register for GST and claim reduced input taxed credits on certain types of acquisitions known as reduced credit acquisitions. Input tax credits are denied on all other acquisitions.

 

If you do decide to register for GST, you can only claim 75% of the GST spent on brokerage fees, as these fees are considered to be a reduced credit acquisition - see GST Taxation Ruling GSTR 2002/2 (example 15):


Example 15: Supply and acquisition-supply

113. S&T Galore is registered for GST and carries on an enterprise in Australia as a share trader. S&T Galore buys and sells shares in the course of carrying on that enterprise. Both the sale and the acquisition of the shares are financial supplies and S&T Galore is denied input tax credits for acquisitions and importations that relate to making those financial supplies. S&T Galore will be entitled to reduced input tax credits for things acquired in making those financial supplies that are reduced credit acquisitions (for example brokerage). Assuming the other conditions in regulation 40-5.09 are satisfied the acquisition-supply in each case is also a financial supply.

 

You can find more information about securities transactions in the Financial services questions and answers guide on our GST issues register page. 

Hope that helps! Thanks, @AmandaE

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Devotee

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Hi @KaZ,

 

Welcome to our Community! We're checking our response with a specialist area, and we hope to get back to you in the next couple of days.

Thanks for your patience, @AmandaE

 

 

 

Best answer

ATO Certified

Devotee

Replies 1

Hi @KaZ

 

Thanks for your question! You're right - share trades are considered to be input-tax sales, which are sales of goods and services that don't include GST in the price. You can't claim GST credits for the GST included in the price of your 'inputs'.

 

However, a share trader can choose to register for GST and claim reduced input taxed credits on certain types of acquisitions known as reduced credit acquisitions. Input tax credits are denied on all other acquisitions.

 

If you do decide to register for GST, you can only claim 75% of the GST spent on brokerage fees, as these fees are considered to be a reduced credit acquisition - see GST Taxation Ruling GSTR 2002/2 (example 15):


Example 15: Supply and acquisition-supply

113. S&T Galore is registered for GST and carries on an enterprise in Australia as a share trader. S&T Galore buys and sells shares in the course of carrying on that enterprise. Both the sale and the acquisition of the shares are financial supplies and S&T Galore is denied input tax credits for acquisitions and importations that relate to making those financial supplies. S&T Galore will be entitled to reduced input tax credits for things acquired in making those financial supplies that are reduced credit acquisitions (for example brokerage). Assuming the other conditions in regulation 40-5.09 are satisfied the acquisition-supply in each case is also a financial supply.

 

You can find more information about securities transactions in the Financial services questions and answers guide on our GST issues register page. 

Hope that helps! Thanks, @AmandaE

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Hi Amanda,

 

I'm wondering do the same rules apply to cryptocurrency trading (basically the identical scenario as the original poster, but with crypto instead of shares)? Do we need to register for GST if we are doing cryptocurrency day trading/speculation and have over $75000 turnover?

 

I know there's been a few changes to the law in the last year regarding GST treatment of crypto.

 

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