Loss in Forex/Share Trading

Thanks Yman, it's definitely trading for me based on the circumstances.

It's all very clear now.

 

I'm not asking for customized advice. I'm gaining some knowledge in order to ask complicated paid advice.

I just need to know roughly the big picture and then asked the right question for paid advice to piece it together.

 

If it is a revenue loss it will reduce your income. If it is a capital loss it will only reduce capital gains.

 

hi BallonTree,
I was at your same situation and had discussion with accountant and ATO. As you are doing CFD and Forex trading the gain and loos is counted as Capital gain or loss. it will not be offseted against your PAYG.

for example, If you incur 10K loss (not the deposit you made , you will will receive a tax statement from IG or CMC) this year (2016-2017), it will be carried forward as a loss for next year. If you made 20K next year (2017-2018), your capital gain for that year is only 10K and you need to pay taxes for that amount only (20K profit - 10K loss from previous year) not for 20K...

Hope I didn't confuse more.

 

Hi
what i gave above is purely based on my situation and should not be treated as a tax advice. you need to consult your Tax Agent ( normal Tax agents will not be able to provide any advice on this)

 

Can a capital loss from CFD offset a capital gain from a property sale?

 

Actually, Y-man, the forex gains & losses provision starts from the default position that these are assessable/deductible.

e.g. you have a foreign currency denominated transaction account or credit card not primarily used for a private purpose. Unless a limited balance election has been made then foreign currency losses may be deductible.

It is a complex area with many exceptions and elections available. Specific advice is needed.

 

Yes. But is this a capital loss?

 

Yes, money put into trading account is gone.

 

No, that doesn't necessarily mean a capital loss.

 

Working out your capital loss


Example, I put it $10k, buy AUDUSD. AUDUSD drops and the system automatically sold my position and money's gone.

 

I think you just don't get it. You have to work out whether what you are doing is on revenue account or capital account. That link may or may not apply to your situation.

 

Carrying on a business of trading in CFDs? ATO ID 2010/56. Revenue losses from CFDs would be deductible.

Even though forex trading is a type of CFD, the foreign exchange provisions under Div 775 apply. This makes losses deductible in many cases.

If you are carrying on a business with low turnover then your losses may be quarantined under the non-commercial business loss provisions in Div 35. One of the exceptions is where your business turnover exceeds $20k.

 

If its a CFD the tax issues are accounted for differently to a CGT issue. Then if its a share trading business it may be different again. Different taxpayers need to consider if their loss is capable of offset v's other income. So two tax issues.

Tip : CFDs are NOT subject to CGT. The example given appears in many aspects to be a FX CFD. To lose 100% of FX funds (moneys gone) the USD would have to have zero value. CFD tax position is explained in TR 2005/15 and the ordinary income concept rears its head.

Re Robs post - While a loss may be deductible the loss may not offset other income. (Non commercial loss ?)...Personally I have al;ways liked para 15 which holds that some speculative "gambling"using CFDs may not be assessable.