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Forex Trading


RobAde

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QUOTE (rossw @ Thursday 09/11/06 06:17am)

QUOTE
The Tax Office is currently assessing the tax implications of 'spread-betting' to provide guidance as to the correct tax treatment of these type of transactions.

 

QUOTE
'Spread-betting' resembles a futures contract that allows people to speculate on whether a share price, share index, commodity price or foreign exchange rate will rise or fall within a given period of time.

 

Bloody hell, did you open up a can of worms with this one, Ross http://www.sharescene.com/html/emoticons/tongue.gif

 

I just got a most interesting return call from John Hue of the ATO. Get this:

 

The official position of the ATO on spread betting is that there is no official position

 

What the????

 

Apparently the 2002 memo Ross posted earlier is the last official comment on this matter. This issue is currently the subject of litigation, and the ATO will not make an official statement until there is a ruling and settlement of the lawsuit.

 

So what is a trader to do? I suppose you have two choices:

 

1) Go ahead and delcare all of your spread betting income and losses. Check in with the ATO from time to time, and if there is a ruling which delcares that spread bets are not taxable, then you can ammend your returns, and all of your taxes paid will be refunded to you. (without interest, I'm sure)

 

2) Not delcare any spread bets until a ruling is handed down. One could easily argue that spread bets are not taxable until the ATO says they are taxable. If a ruling were to declare them taxable 5 or 10 years from now, would that ruling be retroactive? Or would spread bets become taxable as of the date of the ruling? That's anyone's guess. I suppose if you choose option 2, you would want to calculate an estimated tax amount and put that amount in a mortgage offset or other 100% safe investment, just incase a tax bill were to be payable in the future. But again, the argument is easily made that if the ATO will not say if spread bets are taxable for the 2005-06 tax year, then how can a citizen reasonably be expected to pay tax on spread bets for that tax year?

 

John told me that he is aware that there are traders in both camps. This is obviously an individual decision to be made with your attorney and your accountant.

 

The most definitive statement he was willing to make is that while the ATO thought that they "should" be taxable, they cannot at this point in time state whether or not they are in fact taxable.

 

LOL

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In reply to: Danville on Thursday 09/11/06 03:34pm

This could be like punting on horseracing. There are punters who pay tax and have been doing so for years.

 

Then there are those who have refused to pay any tax because they claim that they have no control over the size of the pools and therefore cannot guarantee profits.

 

Hence the activity is deemed gambling and not a business. Much has to do with how you present your case before the commissioner.

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I remember a court case where someone was trying to claim trading as gambling and the case turned upon his methodology. ie if he had a business-like approach then it is investing and therefore taxable income. Sorry I can't remember the name of the case.
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In reply to: Danville on Thursday 09/11/06 02:34pm

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If a ruling were to declare them taxable 5 or 10 years from now, would that ruling be retroactive? Or would spread bets become taxable as of the date of the ruling? That's anyone's guess.

 

Yes it is retroactive in australian law.

I was speaking to an old friend of mine a few days ago about this very topic. He was telling me, when their is a new law, its not applicable from the time when it is written but rather they look retrospectively upto 5 years ago until now.

 

Why isnt gambling taxable?

Dont u pay tax when u win like tattslotto and that? or is that only in the States?

 

Do u remember that aussie that won a poker competition? he had to pay tax on that when he came back, poor fellow...

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In reply to: happy2 on Thursday 09/11/06 04:10pm

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Then there are those who have refused to pay any tax because they claim that they have no control over the size of the pools and therefore cannot guarantee profits.

 

I wish i could guarantee profits from my trading! http://www.sharescene.com/html/emoticons/lmaosmiley.gif

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