Aussie tax

Hi all,

Anybody able to tell me what the deal is with tax on forex trading in Australia? I assumed it would be taxed as a capital gain (or loss!), but is there another way, perhaps as a business?

Any insights welcome.


No idea what ur talking abount buddy…sorry

Not sure about the tax, you need to consult advice from a tax advisor or tax lawyer. They may even be able to tell you about the other option you bring up - using a corporate entity to trade offshore if they also specialise in that. Several corporations (in European countries) not in the trading markets use offshore entities to keep their profits away from tax and only their employees pay income tax. Not sure what can be done, so best asking an expert.

Depends on how you trade.

Any profits will be treated as capital gains or losses unless you gain “trader” classification by the ATO.

Trader classification is given at the ATO’s discression, however there are guidelines that they go by. Generally speaking these guidelines are as follows;

1: You make many and consistent trades over the financial year. How many is “many” and what is “consistent” is open to debate.
2: You are attempting to make a substantial part of your income from trading. ie: it is not just a hobby you muck around with.
3: You approach trading as a business with a pre-determined business plan in place. Such things to indicate this would be an office at home dedicated to trading along with an account used specifically for trading etc.

There are a couple of other guidelines but I can’t remember them off the top of my head.

Basically the ATO is attempting to ensure that any profits you make they can get tax from and any losses you make you can’t claim against other income. Kind of win-win for them really.

It is best to speak to your tax agent about the specifics. However I have found that many a tax agent doesn’t have the answer themselves as there is no hard and fast rule that can be applied.


I actually went to see a tax guy the other day and, as a part-time trader, he seemed to know his stuff. Basically he said the same - it’s a bit of a grey area that’s open to interpretation. The onus is on the individual to prove one way or the other whether it’s a hobby (capital gains) or a major source of income (income tax).

He also said that if you’re a longer-term trader (investor, really) you can benefit from a 50% reduction in the capital gains rate. Not that this applies to me: 1) I’m day trading, and 2) I’ll probbably lose more than I make anyway. :wink:


To Tallpaul and Pkffw :

Are either of you from Perth, WA by any chance?

If so I have opened a thread especially for us on NEWBIE ISLAND :slight_smile: :slight_smile: