ATO Community

Non resident using Australian based trading platform

Newbie

Views 3671

Replies 4

I am a foreigner and I was planning on signing up for an account for an online trading platform that offers CFD's. The platform is based in Australia, though I would be funding the account from a bank account outside of Australia. My intent was to trade mostly in foreign instruments (FOREX or foreign indices such as Dow Jones). Would I be required to pay Capital Gains tax on my profits to the ATO? I'm not sure where the line is drawn as far as Australian Taxable property.

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Certified Response

Former Community Support

Replies 3

Hi @yong_ihw

 

Thanks for your patience while we looked into this for you. The first issue for you is whether or not you are a resident of Australia for Australian income tax purposes. If you are not a resident of Australia for tax purposes then you only have to declare income that is from an Australian ‘source’ or declare capital gains under special CGT source rules. 

Note that generally contracts for differences for non-residents are not subject to the CGT rules , as non residents of Australia are generally only taxed on disposals of Taxable Australian Property -‘TAP’. That is, contracts for differences (CFD’s) are not considered to be ‘TAP’ unless you were carrying on business through a permanent establishment in Australia. Merely operating via an Australian platform would not be determinative that you had a permanent establishment in Australia. Also, if you are not an Australian resident you would need to consider whether the  CFD activities came from an Australian ‘source’ for assessability of ordinary income purposes.  This would depend on a range of factors taking into account your particular circumstances.

 

You'll also need to consider whether Double Taxation Agreements exist between your country of residence and Australia are a tax resident of one these countries,this can influence whether or not you are subject to Australian tax- where you otherwise would be.

 

If you require more specific advice from the ATO we'd suggest requesting a follow up email or callback from our Early engagement team.


Thanks.  

4 REPLIES 4

Most helpful response

ATO Certified Response

Former Community Support

Replies 3

Hi @yong_ihw

 

Thanks for your patience while we looked into this for you. The first issue for you is whether or not you are a resident of Australia for Australian income tax purposes. If you are not a resident of Australia for tax purposes then you only have to declare income that is from an Australian ‘source’ or declare capital gains under special CGT source rules. 

Note that generally contracts for differences for non-residents are not subject to the CGT rules , as non residents of Australia are generally only taxed on disposals of Taxable Australian Property -‘TAP’. That is, contracts for differences (CFD’s) are not considered to be ‘TAP’ unless you were carrying on business through a permanent establishment in Australia. Merely operating via an Australian platform would not be determinative that you had a permanent establishment in Australia. Also, if you are not an Australian resident you would need to consider whether the  CFD activities came from an Australian ‘source’ for assessability of ordinary income purposes.  This would depend on a range of factors taking into account your particular circumstances.

 

You'll also need to consider whether Double Taxation Agreements exist between your country of residence and Australia are a tax resident of one these countries,this can influence whether or not you are subject to Australian tax- where you otherwise would be.

 

If you require more specific advice from the ATO we'd suggest requesting a follow up email or callback from our Early engagement team.


Thanks.  

Newbie

Replies 2

Hi there,
As mentioned ' if you are not an Australian resident you would need to consider whether the CFD activities came from an Australian ‘source’ for assessability of ordinary income purposes', I'm not clear with it.
How can I know that the trading activities came from an Austra ian source?
I only thing I could find is the trading company has an office in Sydney, does it help me to define anything?
Looking forward for your advices

Newbie

Replies 0

Rumi, while we wait for the reply, I did some reading and for stocks, the distinction was whether or not the entity was an Australian company. At that point, any profits are being made off Australia and is then subject to tax.

I am not sure if this is applicable to CFD's or not. Possibly.

ATO Community Support

Replies 0

Hi @yong_ihw and @Rumi

 

As mentioned, if you want more specific information you can put a request through to our Early Engagement Team

 

Additionally we also have a detailed taxation ruling TR200515 that is available which discusses the tax consequences of contracts for differences and provides relevant explanations and examples that you may find helpful.

 

Hope that helps

 

Ari