Share Trading offsets

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Permalink Reply by Bandwidth on June 20, 2009 at 6:09pm

I am not an accountant and I suggest you talk to a good one, here is my view

All the income and loss from share trading is in the name of the entity doing the trading

If the business income is a wage you are paying yourself then the losses can be taken from that income.

How you are seen as a trader changes whether things are seen as capital gain as opposed to income

The joint account is an individual entity

See a good accountant and set yourself up properly

I trade in a family trust which allows me to distribute the income and carry the loses

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Permalink Reply by Greg on June 21, 2009 at 1:34am

Thanks Bandwidth,

I have been through some tough times so have done all my tax myself - I've had the time and a good understanding is all I've needed. It has been simple so far but just need advice as to which boxes to fill. Could not justify a trust structure as things are not stable enough if you get my drift.

Appreciate your guidance.

Cheers,
Greg

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Permalink Reply by Bandwidth on June 21, 2009 at 5:29pm

Hello Greg

There are some good examples on the ATO. I don't know if there are any that meet your needs but worth a look.

The structure of your business will change the way losses can be carried

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Permalink Reply by Bandwidth on June 22, 2009 at 1:56am

Hello Greg

Sorry to hear of your bad run and I hopre you can find a way to settle your affairs in a way that allows you to carry your losses in a way the allows you to write them off.

It is a complex matter nad depends on how any income was presented. If the busieness paid you an income I believe that any personal losses can be written off against this income. If the business retained the incoem in the business name then that is a different tax entity and seperates the business income/loss from personal income/loss.

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Permalink Reply by Greg on June 22, 2009 at 2:33am

Thanks Bandwidth,

The business is a micro-business and unregistered, so income defaults to me personally. The share trading likewise so I am personally carrying a small business income and ongoing capital losses personally to add the share trading result to. What I'm not sure of is whether I can assemble the share trading losses (i.e. the ones traded at a loss) as losses against my other income and the wins ( share trading profits) against the carried capital losses. This would be great. The alternative is that only the nett profit is carried to offset the carried capital losses or as a regular income offset if it's a nett loss. Thinking that each business venture is encapsulated by the tax return system it may be impossible within that structure to separate the trading losses from the gains to apply them individually, although, in the big picture, all biz gains and biz losses should be offsettable with the capital losses offsettable against capital gains due to it being shares.

Am I making sense?

Greg

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Permalink Reply by Bandwidth on June 22, 2009 at 3:51am

As far as I can see there is only one entity YOU so the losses and gains are ALL aplieed to you. Unless I am wrong you are filling in personal tax returns for the business income and losses so as far as the ATO is concerned it is all You

I am not an caaountant and it would ot cot you a great deal to get an account to give you advice on this.

Capital losses can only be applied to capital gains.

As far as I know any capital losses you are carrying, carry for a long time and any future capital gains can be written down by them.

HAve a look on the ATO and see if you can find examples.

If you are considered a share trader that changes all the rules and although it may look better it can be a double edged sword.

From my past returns If you are carrying capital losses they are subtracted from any capital gains you have made

Standard disclaimer I am not a regirtered accountant and I do not have all the information.


Happy to discuss thei over coffee, without specifics what area do you live in

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Permalink Reply by Bandwidth on June 22, 2009 at 4:00am

BTW any cost incurred in trading are written off against the income although I think brokerage is wrapped up in the capital costs

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