How do taxes work for forex trading?

[QUOTE=trustFX;131811]I live in Australia as well and I seriouly doubt that 250k (profit per year?) would be considered “a hobby” by the tax authorities.

Hey TrustFx,

I just had a quick search on the net to see if i could find where i read it, but no luck. So it was basicly something i remember reading, and your right the Gov n Tax authories are not going to just let you keep 250k tax free when they can have a slice of it. I’m going to go to my accountant and get an update on the tax laws for today, they always bloody change the rules, but when one loop hole closes, another one opens.

Boyfx;)

Cool. Feel free to post an update if you don’t mind. I am interested on the tax issue as well.

Thanks.

Yeah for sure, i’ll try get around to it some time this week. Tax, they couldnt make it easy to understand, you go to the ATO website and it’s like your reading another fluckin language.

Boyfx;)

I am just starting. Does anybody know if there is a grace level in trading? Like anything bellow 1k USD in a year being negligible?

Doubt it, it would probably be still classed as income on top of what you earn elsewhere. In Australia we get the first 6-7k tax free. It starts to get more complex though with capital gains,trading as a sole trader or under a company etc… Might be different in the U.S.

dan, in Australia there is no capital gains tax on trading, as you never own the underlying product.

The ATO does classify it as an income stream though, and if it is your second then you are taxed at the top marginal rate

Like they mentioned, depends where you are. Canada it’s essentially capital gain/loss (50% taxed at marginal rate).

Thanks Cyco, figured it was something like that.

Surely the right answer is that there is no right answer…it all depends on what country you live in. Different countries have different laws relating to Capital Gains etc.

Yes, me too i think it depends on the country where you are.

Keep up with how much of your seed money from your already taxed assets you put into forex, I know im on my own come tax time but that’s ok, i treat the account like a rolling balance if i ever do make enough to worry about taxes, as long as its in the account its invested, when I will pay taxes is when it comes out.

Hello, what if for example i had $10,000 in my account. I then made periodical withdrawals that summed up to $800 after the year ends. However, my account lost $2,000 or more from that year. So do I still need to pay taxes for that?

I dont’t pay taxes since I withdraw profit on Skrill and get my money as remittances, they are not taxable.

In Ontario, Canada, profits (over $200) from forex are considered capital gains. Capital gains are taxed at 50% of your profits, based on your tax bracket.

For example. If you make your living trading stocks or FX and you made $100k profit for the year, 50% of that profit ($50k) is taxable at your tax bracket level.

“Several years ago, the Canadian government cut the capital gains inclusion rate (the percentage of gains you need to “take into income”) from 75% to 50%.

For example, if an investor purchases stock for $1,000 and then sells that stock for $2,000, they will have a $1,000 capital gain. Investors pay Canadian capital gains tax on 50% of the capital gain amount. This means that if you earn $1,000 in capital gains, and you are in the highest tax bracket in, say, Ontario (53.53%), you will pay $267.65 in Canadian capital gains tax on the $1,000 in gains.”

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Yes, everything related to money and significant sums are taxed, which even applies to forex trading. However, you will have to pay taxes only for large amounts. If you invest a little money, you will not pay taxes.

Will entirely depend on where you are in the world. Some treat it as income, others capital gains.

Forex trading is tax-free in the UK if spread betting by amateur speculators. How do you pay taxes on foreign exchange? In the UK, if you are obligated to tax your personal profits from foreign exchange transactions, it will be paid and collected as Capital Gains Tax (CGT) at the end of the tax year.

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Every country has its own tax system, so you will probably have to check it with a CA or a tax lawyer to get a better idea.

According to the latest GST news, foreign exchange transactions are currently taxed between 5% and 18%, similar to other commercial transactions.

In the UK it is legal to trade forex via spread betting. Spread betting profits here are exempt from taxation.