Announcements
On 21 July the government announced proposed changes to the JobKeeper program. These changes don’t affect Jobkeeper payments until after 28 September 2020.

ATO Community

Forex Trading and Tax

Highlighted

I'm new

Views 24590

Replies 3

Hi ATO,

 

I'm a Forex trader that has just gotten into a live trading account.

 

I'm an Australian resident for tax purposes I also have a full-time job out on the mines in the NT.

 

I'm looking at using Forex trading to one day be my sole source of income, but I need to build my account up first.

 

When trading either I make a profit or a loss. How and when are they relevant to be taxed.  Do I have to declare my losses while it’s in my trading account? and any profits when do I have to and when do I declare them? while they are in the trading account or when they are withdrawn from the trading account into my nominated bank account?

 

Would this bring me under the sole trader class? and I would have to pay tax on any income earnt while it’s still in my trading account? because my account will go up and down over time. Do I pay tax on the gains and what about the losses?

 

What can I claim for when trading? for e.g., (spare room as an office, laptop, software, pens, paper, rent/Mortgage repayments, losses?)

 

If I was out of the country for 6 months what tax would I pay say I traded while overseas for 6 months and then come back to Australia for 6 month what tax would I pay?

 

Having my mining income and my trading income would they both be classified as one income? So I would fit into the brackets on the ato site?

 

Cheers

Deadllee

1 ACCEPTED SOLUTION

Accepted Solutions
Highlighted

Best answer

ATO Certified

Community Support

Replies 2

Hi @Deadlee,

 

Welcome to our Community and thanks for your patience whilst we received specialist advice regarding your query.

 

Generally speaking, a lot of people who are trading forex using a live trading account are actually trading CFD’s rather than foreign currency.

 

If you're trading CFD’s they will always be on revenue account.  This means you include any profits in your assessable income, and any loss can be included as a deduction.  Your profit or loss is made when your trade is ‘closed out’, rather than when the proceeds are transferred out of your trading account. You're then taxed on all of your income at the marginal rate that applies to your level of income.

 

You won’t necessarily be in business as a trader, you would usually need to be making a huge amount of trades to be considered to be in business.  However, you can ask the ATO for a private ruling on whether or not your activity would be considered to be a business.

 

If you are not in business you will not be able to claim deductions such as home office expenses against your trading activity.

 

See also this previous post on ATO Community on the Tax treatment of CFD’s.

 

Thanks.

3 REPLIES 3
Highlighted

Best answer

ATO Certified

Community Support

Replies 2

Hi @Deadlee,

 

Welcome to our Community and thanks for your patience whilst we received specialist advice regarding your query.

 

Generally speaking, a lot of people who are trading forex using a live trading account are actually trading CFD’s rather than foreign currency.

 

If you're trading CFD’s they will always be on revenue account.  This means you include any profits in your assessable income, and any loss can be included as a deduction.  Your profit or loss is made when your trade is ‘closed out’, rather than when the proceeds are transferred out of your trading account. You're then taxed on all of your income at the marginal rate that applies to your level of income.

 

You won’t necessarily be in business as a trader, you would usually need to be making a huge amount of trades to be considered to be in business.  However, you can ask the ATO for a private ruling on whether or not your activity would be considered to be a business.

 

If you are not in business you will not be able to claim deductions such as home office expenses against your trading activity.

 

See also this previous post on ATO Community on the Tax treatment of CFD’s.

 

Thanks.

Highlighted

Newbie

Replies 1

Hi,

 

For trading losses, which section of the Tax Return for Individuals form it should be reported? Thanks.

 

 

Highlighted

Community Support

Replies 0

Hi @ckhkel

 

Thanks for your post.

 

A similar question has been asked in our Community before. You can check out the answer here: Am I entitled to tax deductions on my income from CFD trading?

 

Hope this helps.

 

Thanks, ChrisR