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Loss in Forex/Share Trading

Discussion in 'Accounting & Tax' started by BallonTree, 17th Oct, 2016.

  1. BallonTree

    BallonTree Active Member

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    Hi, where can I deduct loss in Forex/Share Trading?
    Against personal income?
    Against property rental income?
    Against future Forex/Share gains?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    If trading it will probably be an income loss. You could deduct in against other income.

    Seek tax advice.
     
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  3. Rob G

    Rob G Well-Known Member

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    Are you actually trading in foreign currency or making gains/losses on a foreign currency denominated account?

    Or, did you make a short term foreign exchange loss related to acquisition or disposal of shares on the capital account? Note that individuals purchasing and selling shares directly are usually still regarded by the ATO as investors and not a share trading business, even if trades are frequent. If so then an election to make a revenue loss is an option.
     
  4. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Rob makes good points. Not all borrowings are tax a deductible and foreign currency denominated shares could be a great example.

    eg :
    - Shares held for resale at a profit but not a share trading "business". The Fx value may well be incorporated into the calc of the gain / loss
    - Shares held for a period which generate investment income from divs and also generate a CGT gain or loss may be treated differently to shares which are bought without expecatations of dividends.
    - CFDs which are treated differently
    - Employee share plan shares

    There is never a single answer. Personal advice generally helps in this area.
     
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  5. BallonTree

    BallonTree Active Member

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    Forex Trading as in like trading stocks.
    What if I have no income for this year, and properties are negative geared, so where does it goes?

    Does my income go below 0?
     
  6. The Falcon

    The Falcon Well-Known Member

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    [​IMG]

    Love the banner ads!

    lol.
     
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  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Possibly...That would be the tax loss that carries forward
     
  8. BallonTree

    BallonTree Active Member

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    Does the loss in trading forex and stocks go against offsetting a future income? or only offsetting gains in trading forex/stocks?
     
  9. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Generally speaking, if a capital loss occurs it carries fwd and only offsets a future capital gain. If the future cap gain is a discount type gain the loss comes off the total gain before the 50% discount is calculated not after.
     
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  10. BallonTree

    BallonTree Active Member

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    Can a capital loss in forex offset a capital gain in property?
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes
     
  12. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The only (general) limitation to offsetting gains and losses is where collectibles are involved. A CGT loss on a collectible must offset a gain on collectibles or it cannot be used. And some special rules for trusts (that I can quickly think of)
     
  13. BallonTree

    BallonTree Active Member

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    Sigh, so capital loss cannot offset income stream or anything like that.........
     
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    What do you mean?
     
  15. Rob G

    Rob G Well-Known Member

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    You still have not clarified the precise circumstances of a forex 'trading' loss.

    By default, forex gains & losses are on the revenue account unless an exception applies.

    Exceptions includes foreign currency accounts primarily with a low balance or for private or domestic savings as opposed to transactions.

    Another exception may be in relation to acquisition or disposal of capital assets, but an election may be available to treat as being on the revenue account.

    If no exception applies, losses may be deductible.

    It is taking too long trying to discover precisely what is happening. You should consult a specialist and make full disclosure to enable an informed opinion to be given.
     
  16. BallonTree

    BallonTree Active Member

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    Forex trading (like in IG markets) loss cannot be deducted from salary, right?
     
  17. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Wrong.

    but whether this applies in your case or not will depend on the circumstances.
     
  18. BallonTree

    BallonTree Active Member

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    Could you provide an example where it applies? I'm confused
     
  19. The Y-man

    The Y-man Moderator Staff Member

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    @BallonTree

    I believe what the experts are trying to determine from you is whether your activities would constitute "investing" or "trading" (correct me if I'm wrong experts! :))

    My understanding (and I defer to any of the experts who post after me):

    Generally, "investing" loss is only deductible against other capital gains, not income.

    Conversely "trading" loss are deductible against other income.

    It comes down to how often you trade traded (several times a day, once a week, once a month, once a year?), how much capital involved ($1k per trade, $10k per trade?), etc.

    If you were trading 1 trade per day of $10k average value per trade, you'd likely be viewed a trader, and more likely to be able to claim your loss against other income.

    If on the other hand you did one trade in the year risking $5k, any losses will ba an "investment loss" and you could probably only claim the loss against other capital gain

    The Y-man
     
  20. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    FFS let me be blunt....get personal advice. Do you expect a skilled professional will post to a free website to tell you how to save $ for free....Pay and find out. I would pay Rob, Terry or whoever for the advice !!
     
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