Re: CFD Trading - IG Markets Tax treatement of US / global / futures / foreign exchange instruments.
Can someone please assist me.
I have traded CFD's for the last year with IG Markets. I have traded US stocks, AUS Stocks, Indicies, Oil gold Forex etc etc.
IG Markets provides an annual tax reports or ad hoc one on request detailing profits and losses, commissions, dividends etc etc for a specific time period.
When i trade an index (eg s&p, or US stock, FTSE etc), IG markets immediately converts the AUS $ to a foreign currency. I am assuming behind the scenes they will hedge their own position. Any profits or losses i make i can just convert back to AUS currency.
So eg, i buy 1 s&p mini forward contract. The AUS is converted to $US 50 equivalent and then i profits 1 pt and my account will show a 50$ profit $US. Then I can request this to be converted back to AUS currency at the exchange rate on the request.
The annual tax report splits the currencies up into the foreign currencies. So it will detail a $50 profit in US dollar.
My accountant has told me that there is no specific ruling from the ATO that states this can be treated as AUS income as the tax report has split this into 'foreign income' currencey US. I have searched the forums here and on that ATO etc and found little information.
The only rule i hvae found is that from next FY08 there is a foreign income legislation ruling that allows all foreign income and AUS income to be offset against each other.
This doesn't help me because i believe i should be able to claim the $US CFD loss on the tax statement as AUS dollar.
Does anyone have experience with this? And can they point me to anywhere where i can clearly show my accountant that this can be claimed as AUS$.
The physicaly transaction takes place in an australian acc, as well whether a market maker Hedges against my position is entirely up to them. As well I am purchasing CFD's on a synthetic market maker model, meaning there is no physical exchange of contracts like options. *BTW I trade US options.