Can you claim brokerage as a tax deduction?

piggybank · 21 August 2013

Hi,

It would be very much appreciate it if anyone could help me out.

I sold some shares (of 3 companies and they had all made a small gain) in the last tax year and was wondering if I can claim either the brokerage or GST (or even both) for the buying and selling of the shares?

I hope I have made myself understood? If you think that there is anything else I should be made aware of then I am all ears!!

Thanking those in advance of your reply.

Regards
PB

Trembling Hand · 21 August 2013

You should probable waste a day reading this,

http://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/ind00342388n26320613.pdf

piggybank · 21 August 2013

Trembling Hand said:
You should probable waste a day reading this,

http://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/ind00342388n26320613.pdf

Hi Trembling Hand,

Thanks for the link but I didn't see anything related to my query about me being able to claim against any of the brokerage & GST expenses? I was going to email them this morning but I couldn't find an email address on the site, nor did they have the facility on their site to write to them!!

If anyone knows of an email address at the ATO to send my query to, then I would much appreciate it.

Regards
PB

Trembling Hand · 21 August 2013

try here about page 10

http://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/ind00342394n41520613.pdf

Gringotts Bank · 21 August 2013

I've always claimed them as a deduction.

tinhat · 21 August 2013

Hey pig.

I don't know if this is the right answer but I would imagine that if you are a share trader for tax purposes you would claim brokerage as an expense and then also account for GST in your business activity statement (BAS) if you are registered for GST.

Because I and my SMSF are investors (like most people) and subject to capital gains tax and am not registered for GST the brokerage is included in the cost base and the receipt of sales. That is, the brokerage (inclusive of GST) when purchasing shares is added to the cost base and the brokerage (inclusive of GST) when selling the shares is deducted to arrive at the net proceeds of the sale.

In summary for most investors selling shares is a capital gains tax event and brokerage is accounted for in the cost base and disposal proceeds of the CGT event inclusive of GST. For professional traders brokerage is an expense and if the trader is registered for GST then GST would be accounted for in the BAS.

I'm no expert so I don't know if there is a choice as to whether you claim the brokerage as a deduction or account for it in the CGT event as I do - but my accountant seems happy enough with my bookwork.

I know of someone who's SMSF is registered for GST but I think, according to my limited understanding of tax law, that is a bit questionable and I wouldn't try it on (nor would it be worth my time).

burglar · 21 August 2013

piggybank said:
... nor did they have the facility on their site to write to them!! ...

... you can write to us at GPO Box 9990, in the capital city of your state/territory. ...

http://www.ato.gov.au/About-ATO/About-us/Contact-us/

pixel · 21 August 2013

tinhat said:
Hey pig.

I don't know if this is the right answer but I would imagine that if you are a share trader for tax purposes you would claim brokerage as an expense and then also account for GST in your business activity statement (BAS) if you are registered for GST.

Because I and my SMSF are investors (like most people) and subject to capital gains tax and am not registered for GST the brokerage is included in the cost base and the receipt of sales. That is, the brokerage (inclusive of GST) when purchasing shares is added to the cost base and the brokerage (inclusive of GST) when selling the shares is deducted to arrive at the net proceeds of the sale.

In summary for most investors selling shares is a capital gains tax event and brokerage is accounted for in the cost base and disposal proceeds of the CGT event inclusive of GST. For professional traders brokerage is an expense and if the trader is registered for GST then GST would be accounted for in the BAS.

I'm no expert so I don't know if there is a choice as to whether you claim the brokerage as a deduction or account for it in the CGT event as I do - but my accountant seems happy enough with my bookwork.

I know of someone who's SMSF is registered for GST but I think, according to my limited understanding of tax law, that is a bit questionable and I wouldn't try it on (nor would it be worth my time).

All of the above.
I am registered for GST in both my SMSF and Family Trust.
Part of the GST can therefore be reclaimed via BAS; the rest of the Brokerage is a business expense with Capital Gains (Trading Profits) being the net bottom line.

waimate01 · 23 August 2013

The brokerage (including GST) affects your cost/sale basis.

Eg, buy $1000 of shares and pay $50 brokerage (total cost $1050). You can claim nothing (possibly unless you are considered by the ATO to be carrying on a trading business, but that's outside my area).

Two years later, you sell those shares for $1500 and pay $75 in brokerage (total money received $1425). You can still claim nothing as an expense, but the capital gain you declare is 1425-1050 = $375, not the $500 as you might first think.

As you can see, the net effect is much the same as claiming brokerage as an expense, except for two things:
- timing: the $50 on purchase is only accounted for on sale
- CGT: due to the various concessions available to CGT, the actual tax may end up slightly different between the 'simple' and the 'correct' way of handling brokerage expense.

Can you claim brokerage as a tax deduction?

piggybank

Trembling Hand

Can be found on the bid

piggybank

Trembling Hand

Can be found on the bid

Gringotts Bank

tinhat

Pocket Calculator Operator

burglar

pixel

DIY Trader

waimate01

Similar threads

Can you claim brokerage as a tax deduction?

Can be found on the bid

Can be found on the bid

Pocket Calculator Operator

DIY Trader

Similar threads

Privacy & Transparency

Privacy & Transparency