$70,000 loss for the year - what now?

[Ken]

gday.

just after some quick advice.

I made a loss of $70,000 from trading for the year. got hit with some margin call.

i only earnt $40,000 from work and and paid about $7000 in tax from my regular job.

So yeah I ****ed up.

Is it best to claim a portion of my capital losses over several years? or is it best to put in a tax return for the next 3 years and then do it one lump some???

whats the best way to go about getting maximum back on the capital losses i have suffered.

i presume that if i do it right. I should be able to get $35,000 back, if i am taking $70,000 off every dollar earned over $50,000

 

[disarray]

Re: 70,000 loss for the year what now

see an accountant. not h&r block, but a proper chartered accountant.

p.s. sympathies for your loss.

 

[bigt]

Re: 70,000 loss for the year what now

You probably know this already, but you can only offset a capital loss from a capital gain..or does this differ if you are a trader (by the ATO classification) i.e. is the income not a capital gain/loss rather an earning loss and tax deductible?

 

[MRC & Co]

Re: 70,000 loss for the year what now

You probably know this already, but you can only offset a capital loss from a capital gain..or does this differ if you are a trader (by the ATO classification) i.e. is the income not a capital gain/loss rather an earning loss and tax deductible?

I would imagine this is classified as a capital loss.

So will have to be offset against a capital gain in any subsequent years a capital gain is made. Probably the faster, the better, better to have money in your hands as soon as possible so you can avoid as much as possible the erosion of inflation and opportunity cost.

Not to mention, it will be taxed at the margin rate of your yearly income (from what I understand) so keep off-setting it each year as capital gains come in (assuming they will) as opposed to doing it in one hit.

But definately, see an accountant.

How the fukc did you loose 70k before a margin call came in though? You must have been playing with some serious leverage!

 

[Miner]

I am not an accountant nor this is a tax advice
Please consult your tax and financial adviser for competent advice


My friend Joe Smith had a similar situation of different magnitude
He was advised to do the two things:

• Long term to demonstrate that Joe incurred a financial loss against a capital acquirement and showing him as an investor The loss was adjusted over a period and he need to show his investment pattern and not to take tax benefit from one off loss
  
• As a short term he was asked to show the loss as a trading loss. He was asked to prove his trading pattern from his trades of at least 16 from last 3 months

Not sure how Joe managed his situation as he now in Africa and prospecting

Your situation may not be as same as Joe and every situation could be unique.

June is only few days away to be finished if I am you I will not seek advise in this forum and straight call my accountatnt for help It will cost you only couple of hundred.

I never take advise from tax agents or people with only NIA certification. I always ask my accountant who is very good and a CA

This forum can not legally provide you any financial advise either

Sorry folk I fully sympathise and do not increase your agony either but I will act fast whatever I want to do

 

[jrs]

Tell us more about your holdings... Have you actually sold to incur a real loss or is it just a paper loss?

... and as the other posts here mention - how you can handle the loss depends on whether or not you can prove you're a trader.

 

[Bushman]

Also keep in mind that a dollar today is worth more that a dollar tomorrow. So if you can and it is within the rules, minimise your tax payable today.

But, off course, keep the ATO in mind and check any scheme with a tax accountant. Remember not every CA is a tax professional. I should know - I am a CA!

 

[barney]

Hi Ken, I did pretty much the same thing a couple of years ago when I first started dabbling (I actually did a bit worse than you did, but learned a hopefully valuable lesson ), so I know how you feel.

What the lads above have said is pretty much right.

You can't offset against your regular wage/taxes unless ...
a) you are classified a trader, and
b) You are self employed ................ If you are, they can treat your trading as a second "business" .............

The tax Dpt will have to determine whether you are classified a trader ... (Regular buying/selling and volume of cash going through your account)

I'm not sure of the rules if you are determined an Investor (buy/hold)

Overall, there is not much joy in the situatuation, but professional advice to set up the best plan of attack is the ONLY option. Good luck with it.

 

[tech/a]

Apart from the tax issues.

What now?

Stop trading.
Find out WHY you made those losses.
I'll bet you took small profits and copped large losses---due partly to margin calls.
I'll also bet you had incorrect position sizing.
You'll possibly over traded and your position sizes were larger than they should have been.

 

[njc.corp]

ken- i dont know how u feel and dont want to know what it feels like-

like tech said-stop-

imo-i would take a break and see where i went wrong and change logical basic things like sizing and risk-thats me only-

$70,000? can i ask why this was not detected at say 5 k or 10 k or 20 k-

by all means i am not having a go and u dont have to answer the above question

in advance- thanks

Nick--

 

[michael_selway]

gday.

just after some quick advice.

I made a loss of $70,000 from trading for the year. got hit with some margin call.

i only earnt $40,000 from work and and paid about $7000 in tax from my regular job.

So yeah I ****ed up.

Is it best to claim a portion of my capital losses over several years? or is it best to put in a tax return for the next 3 years and then do it one lump some???

whats the best way to go about getting maximum back on the capital losses i have suffered.

i presume that if i do it right. I should be able to get $35,000 back, if i am taking $70,000 off every dollar earned over $50,000

Hm you shoud have linvested in coal, iron ore and phosphate stocks! you may have gained $70000 this FY!

thx

MS

 

[GreatPig]

Got any pepper to go with that salt, Michael?

GP

 

[MRC & Co]

Got any pepper to go with that salt, Michael?

GP

Will Vinegar do?

 

[son of baglimit]

ken - from your post, it appears you have very little understanding of the tax system in its current form, and how to use it to your advantage.

tech/a was correct in his statement to cease all trading, and then as part of the whole re-education, gain an understanding of how income tax, deductions & capital gains & losses works.

you say you earn $40k - get an job with the ato - their minimum is higher than that. they have endless resources available, and you always get plenty of time to peruse them lol.

 

[ta2693]

this year's market is the worst in the past ten years.
What can I say. Bad Luck. Guess what is my biggest loss in value. WOW! ASX! IAG! FXJ!CTX!
What a strange life.

 

[MRC & Co]

you say you earn $40k - get an job with the ato - their minimum is higher than that. they have endless resources available, and you always get plenty of time to peruse them lol.

lol, you don't need a job at the ATO to learn the tax system. An accountant would know it far better.

Not to mention, Ken may enjoy his job, more than I can say for most in the PS!

The word 'drones' comes to mind!

While you can work on some interesting things, ultimately, all is decided by cabinet! Saw it first hand working at the highest level advisory to cabinet, including meeting with the Ministers themselves. How much input did me or my bosses have? NONE! If you saw half of it, you would never want to work in the PS again! No matter how much research you do, or what conclusion you come too, it is just a political game and you just wasted your time!