ATO Community

I have an ABN, how do claim my trading through it?

Initiate

Views 136

Replies 1

Hi, I have an ABN im not using, i'd like to run my trading through it for tax. Do i just ask my accountant to use my perosonal share trading transactions or do i have to open a business banking account and put money into it and then at tax time use that to file my tax return.

 

I'm asking as i'm new to trading but one of my share holdings is doing alot better then expected, so much so that it might be 200K by the end of the year which will be under the 12 months. I'm most likely trading as opposed to investing so if i do sell in november i'd be in the 47% tax bracket, but would much rather pay 27.5% until I can afford the 47%.

 

appriciate the time anyone takes to answer this.

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Community Support

Replies 0

Hi @commiestan,

 

It sounds like you want to apply the company tax rate of 27.5% to your income from trading shares.

 

Firstly you would need to determine what type of ABN you have. The company tax rate only applies to companies registered with ASIC, corporate unit trusts and public trading trusts. If you have a sole trader ABN the company tax rate would not be applicable even if you opened a separate bank account, and you will need to pay tax at the individual income tax rates.

 

Let's assume you have a proprietary limited company registered with ASIC. This would actually be a separate legal entity from yourself. If you already own the shares personally you would need to basically sell the shares to your company and this sale itself may result in taxes. When the company distributes its income to you, you may also need to pay tax on that income, less the tax that the company has already paid.

 

It sounds like you've already done some research on shareholding as an investor vs as a business, which is great, because you'll need to work that out before lodging your return. If you're feeling unsure about how to trade in the most tax-effective way, it may be best to see a registered tax agent or financial planner.

 

This page on business structures explains the features of the different entity types.

 

I hope this has helped.

 

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hi @commiestan,

 

It sounds like you want to apply the company tax rate of 27.5% to your income from trading shares.

 

Firstly you would need to determine what type of ABN you have. The company tax rate only applies to companies registered with ASIC, corporate unit trusts and public trading trusts. If you have a sole trader ABN the company tax rate would not be applicable even if you opened a separate bank account, and you will need to pay tax at the individual income tax rates.

 

Let's assume you have a proprietary limited company registered with ASIC. This would actually be a separate legal entity from yourself. If you already own the shares personally you would need to basically sell the shares to your company and this sale itself may result in taxes. When the company distributes its income to you, you may also need to pay tax on that income, less the tax that the company has already paid.

 

It sounds like you've already done some research on shareholding as an investor vs as a business, which is great, because you'll need to work that out before lodging your return. If you're feeling unsure about how to trade in the most tax-effective way, it may be best to see a registered tax agent or financial planner.

 

This page on business structures explains the features of the different entity types.

 

I hope this has helped.