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Annualised CGT on day-trading? (1 Viewer)

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Hello,

I have a question about managing tax on day trading.

I have only ever held stocks as long-term investments before, but I'm going to dip into shorter-term holdings just to see how it goes. My concern is managing the CGT implications.

I know that, if you are managing an investment strategy with short-term holdings, at the end of the tax year the ATO will be taxing any capital gains that I have made at my marginal rate.

Broadly, I assume that through the course of a year capital losses can be used to offset capital gains as different stocks move through the portfolio, with that in mind is it a safe strategy to roll profit and loss through between trades if I maintain a running total of the capital gain or loss incurred from each trade for reporting purposes given that, should I make a net capital loss over the year (I hope not!) this would offset any net capital gains made?

With that in mind, I understand that during the year I will have held many stocks for less than 12 months and I will be taxed at my marginal rate on each gain at the point where it is realised. Given that, I assume that, regardless of the content of my portfolio on 30 June, I will (if I am in net profit) need to be prepared to sell a part of my portfolio to cover my tax requirement if I have not set aside gains? Financially,

Is there anything unsafe about that strategy or something important that I need to know?

I had assumed that I would find the answer easily online, but not so much in terms of a single clear understanding of whether I am right or wrong!

I assume that I can just bake any FOREX fluctuations into my gross net gain or loss at the point of sale?

Thank you so much in advance to anybody who chooses to answer this.

Regards,

Deggy
 
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Hello,

I have a question about managing tax on day trading.

I have only ever held stocks as long-term investments before, but I'm going to dip into shorter-term holdings just to see how it goes. My concern is managing the CGT implications.

I know that, if you are managing an investment strategy with short-term holdings, at the end of the tax year the ATO will be taxing any capital gains that I have made at my marginal rate.

Broadly, I assume that through the course of a year capital losses can be used to offset capital gains as different stocks move through the portfolio, with that in mind is it a safe strategy to roll profit and loss through between trades if I maintain a running total of the capital gain or loss incurred from each trade for reporting purposes given that, should I make a net capital loss over the year (I hope not!) this would offset any net capital gains made?

With that in mind, I understand that during the year I will have held many stocks for less than 12 months and I will be taxed at my marginal rate on each gain at the point where it is realised. Given that, I assume that, regardless of the content of my portfolio on 30 June, I will (if I am in net profit) need to be prepared to sell a part of my portfolio to cover my tax requirement if I have not set aside gains? Financially,

Is there anything unsafe about that strategy or something important that I need to know?

I had assumed that I would find the answer easily online, but not so much in terms of a single clear understanding of whether I am right or wrong!

I assume that I can just bake any FOREX fluctuations into my gross net gain or loss at the point of sale?

Thank you so much in advance to anybody who chooses to answer this.

Regards,

Deggy
Tradings gains are not capital in nature but normal income.
 

rnr

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Hello,

I have a question about managing tax on day trading.

I have only ever held stocks as long-term investments before, but I'm going to dip into shorter-term holdings just to see how it goes. My concern is managing the CGT implications.

I know that, if you are managing an investment strategy with short-term holdings, at the end of the tax year the ATO will be taxing any capital gains that I have made at my marginal rate.

Broadly, I assume that through the course of a year capital losses can be used to offset capital gains as different stocks move through the portfolio, with that in mind is it a safe strategy to roll profit and loss through between trades if I maintain a running total of the capital gain or loss incurred from each trade for reporting purposes given that, should I make a net capital loss over the year (I hope not!) this would offset any net capital gains made?

With that in mind, I understand that during the year I will have held many stocks for less than 12 months and I will be taxed at my marginal rate on each gain at the point where it is realised. Given that, I assume that, regardless of the content of my portfolio on 30 June, I will (if I am in net profit) need to be prepared to sell a part of my portfolio to cover my tax requirement if I have not set aside gains? Financially,

Is there anything unsafe about that strategy or something important that I need to know?

I had assumed that I would find the answer easily online, but not so much in terms of a single clear understanding of whether I am right or wrong!

I assume that I can just bake any FOREX fluctuations into my gross net gain or loss at the point of sale?

Thank you so much in advance to anybody who chooses to answer this.

Regards,

Deggy

Hi @Deggy,

Welcome to ASF.

If you type this question "Can I be a share trader and investor" into a google search you will find copious amounts of information for you to sift through and consider the many issues related to your the path that you may choose. It is worth noting any questions that arise from this exercise that may need further clarification. A discussion with an accountant would probably be beneficial prior to making a final decision to ensure you have understood all the ATO requirements before starting your new venture.

Cheers, Rob
 
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"Can I be a share trader and investor"

Hi @Deggy and also welcome to ASF

As @rnr has eluded to .... Your position in regard to Taxation depends on whether the ATO deems you as an Investor or a "Trader"

The definition is not exactly black and white so the opinion of an Accountant "who knows" is advised.

It will come down to your "turnover" (not your profit) as to how the ATO perceives your position/intentions.

It's a grey area depending on your personal situation etc.. Cheers.
 

tech/a

No Ordinary Duck
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Hi @Deggy and also welcome to ASF

As @rnr has eluded to .... Your position in regard to Taxation depends on whether the ATO deems you as an Investor or a "Trader"

The definition is not exactly black and white so the opinion of an Accountant "who knows" is advised.

It will come down to your "turnover" (not your profit) as to how the ATO perceives your position/intentions.

It's a grey area depending on your personal situation etc.. Cheers.

Day Trader suggests high turn over = trader.
 
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MY view but check before action.

ATO site shows a demo and I think a total of 40 or 50 buys or sell a year pretty much makes you a trader especially if short term holdings.
As @barney said above grey area.

As above, Cap losses offset cap gains (no fees included here) and costs come out of it assuming a person not a company.

Year 2 will likely need to do quarterly IAS's to pay tax as you go and adjusted at the EOFY.
 

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