Tax on forex for small time investor

I work full time and want to move beyond my Cash PIE's and Term Deposits, currently i'm doing research on other investment options including forex

2 questions:

a) If i keep my full-time job earning ~$60K PA and do a little forex on the side, what are my tax obligations if i trade personally i.e. not through a company? is it just a case of pay 39% tax on my positive returns for each financial year and not get a tax rebate if i lose money? Is this the case or is there a better way of doing this?

b) Who should i do my forex trading through? I had a brief look at ASB securities and it seems like i have to pay a lot of fees and have around about $20,000 in a foreign account at a time, which is too high a % of my portfolio (i only have about $30K right now). At the same time the smaller forex places look kinda dodgy to me, never heard of them before, cheap looking websites, etc.

Thank in advance for answers to these questions and any other suggestions

"is it just a case of pay 39% tax on my positive returns for each financial year and not get a tax rebate if i lose money?"

As I understand it, yes.. and if you form a company any losses (there will be some) can be treated as expenses I think. I'm no tax expert, perhaps someone else could confirm.

Perhaps someone could suggest a tax accountant that has worked with companies formed for trading purposes?

Trading through ASB is a waste of time, their spreads are huge like 5%
I use OMFinancial, good brokerage advice.
Alternatively for DIY trading you could try CMC
Both of these have fx cfds too which can magnify your gains or losses

Quote:

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Originally Posted by russki

"is it just a case of pay 39% tax on my positive returns for each financial year and not get a tax rebate if i lose money?"

As I understand it, yes.. and if you form a company any losses (there will be some) can be treated as expenses I think. I'm no tax expert, perhaps someone else could confirm.

Perhaps someone could suggest a tax accountant that has worked with companies formed for trading purposes?

Trading through ASB is a waste of time, their spreads are huge like 5%
I use OMFinancial, good brokerage advice.
Alternatively for DIY trading you could try CMC
Both of these have fx cfds too which can magnify your gains or losses

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Alot of these questions have been asked before, have a look the newbie section as alot of posters have covered these previously.

You dont need a company to claim losses, any individual deemed a "trader" can claim any costs incurred in deriving revenue.

One important point regarding companies over an individual, is the loss of the ability to account for trading on a "cash basis".

A company/Trust/Limited Liability Partnership/Partnership is a separate legal entity & must account for there trades on an "accrual basis".

Basically they must account for unrealised gains/losses, whereas an individual only needs to account for "cash basis" transactions, ie when the transaction takes place.

Russki - Im an accountant (ex PwC) & trade as an individual & have traded using companies before.

PM me any further questions you may have :)

Quote:

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Originally Posted by stevesnz

I work full time and want to move beyond my Cash PIE's and Term Deposits, currently i'm doing research on other investment options including forex

2 questions:

a) If i keep my full-time job earning ~$60K PA and do a little forex on the side, what are my tax obligations if i trade personally i.e. not through a company? is it just a case of pay 39% tax on my positive returns for each financial year and not get a tax rebate if i lose money? Is this the case or is there a better way of doing this?

b) Who should i do my forex trading through? I had a brief look at ASB securities and it seems like i have to pay a lot of fees and have around about $20,000 in a foreign account at a time, which is too high a % of my portfolio (i only have about $30K right now). At the same time the smaller forex places look kinda dodgy to me, never heard of them before, cheap looking websites, etc.

Thank in advance for answers to these questions and any other suggestions

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I use an NZ broker LatitudeFX.co.nz. They are well established and use MT4 platform. PM me for more info about them.

My son has a very small income generated from home computer use. He has been declaring it to the IRD as some years it has been a bit higher. This has gone on for about 5 years without any questions. This year however he has been contacted by ACC to inform him that the income has to be levied. He is a student and has a part time job which is obviously levied and deducted by his employer.

My question is, do any of you who are share traders or foreign exchange traders pay ACC levies on your profits as a self employed person.

Quote:

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Originally Posted by 777

My son has a very small income generated from home computer use. He has been declaring it to the IRD as some years it has been a bit higher. This has gone on for about 5 years without any questions. This year however he has been contacted by ACC to inform him that the income has to be levied. He is a student and has a part time job which is obviously levied and deducted by his employer.

My question is, do any of you who are share traders or foreign exchange traders pay ACC levies on your profits as a self employed person.

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Here's some links to help you...

http://www.ird.govt.nz/income-tax-in...ies-wages/acc/

http://www.acc.co.nz/levies-and-cove...oyed/index.htm

Technically yes, ACC should be paid if you want to be covered should you be injured, & you being injured prevents you earning...

This gets tricky because ACC will only pick up those traders who file tax returns!

777 - If you have other questions PM me, questions like these get lost in the threads

Hi, I'm a forex newbie and am using the trial platforms from Oanda and LatitudeFX with almost encouraging results so far and the potential and pace of the FX market is appealing.


Present trades:

Long on USD.JPY - Bought at 88.223 - now 89.749

Short on NZD.USD - bought at...well lets just say it was an hour or so before the RBNZ announced there will be no change to the OCR....best lesson I've learnt this year, don't over look fundamentals... but it's just about to tip back through that same entry level so maybe it'll look better this time tomorrow (minus a weeks worth of overnight interest payments).


I've got a tax question I haven't been able to find answers for, I read through most of the forex threads and tried searching for anything related to taxation.

In a few months, I may be keen to open an account with Oanda, but their fine print mentions all non US residents will get taxed 30%. Will the remaining funds be subject to NZ tax also? (I'm not a tax dodger by any means, just don't need to be stuffed twice...maybe I'm overlooking something really obvious here...)

Any thoughts appreciated.