Tax deductibility of bokerage?

[fungus pudding]

When are brokerage fees deductible for tax purposes? I always assumed they were and have always claimed them with no problem but I am not a trader and have very few transactions. But I have now been told brokerage is not a deductible expense. Bound to be a few experts here.

[Snapper]

Brokerage isn't deductible unless you are a trader or the security in question is a fixed interest security. For FIF tax brokerage costs are included in the calculations.

[Glendoonie]

When are brokerage fees deductible for tax purposes? I always assumed they were and have always claimed them with no problem but I am not a trader and have very few transactions. But I have now been told brokerage is not a deductible expense. Bound to be a few experts here.

I was told by my accountant that if my intention is to trade shares at a profit I am obliged to declare said profit and pay the tax man. I am OK with this as the brokerage is tax deductable whether or not I make money. When I trade shares at a loss, which happens from time to time because I am crap at this game, I declare that loss as a tax deduction.

Shares I bought ions ago (like decades) were not bought with the inention of trading them so I do not declare any profit/loss, nor do I claim for the brokerage fees.

I know people who buy and sell shares; sometimes making a profit and sometimes making a loss. They trade in such small numbers they do not consider themselves a 'traders' and they declare nothing.

As to which way is best, I don't know. I think what I do is fair and would not be concerned if I were audited by the IRD.

G

[Jay]

fp- are you really meaning that you buy long term for dividends (income) and then is brokerage tax deductible?
Some may say yes as the cost is to derive taxable income.

Don't know the answer myself, however I never have claimed it on my long term portfolio

[fungus pudding]

fp- are you really meaning that you buy long term for dividends (income) and then is brokerage tax deductible?
Some may say yes as the cost is to derive taxable income.

Don't know the answer myself, however I never have claimed it on my long term portfolio

That's exactly what I mean. I've never dabbled in shares but have bought a considerable quantity of property trust stuff lately. I won't ever sell, it's permanent to the grave with me stuff. I have received mixed advice about the deductability of brokerage. I just assumed it was deductable as is any other business expense. Perhaps not? I rang IRD who said I would have to write to them as the answer could be yes or no, but wouldn't elaborate on the criteria for deductability. Any enquiry on this needs to be in writing. Seems a simple matter, but obviously it isn't.

[tobo]

Duh, you would think that brokerage would be THE most basic expense related to buying shares. Buying shares is either for trading profit (taxable) or for investment dividends (taxable). IRD even have a line in the IR3 for dividends!
The idea that the IRD can't even give a straight answer on this is ludicrous.

IRD never ceases to amaze me.

[Wilkins_Micawber]

Buying shares is either for trading profit (taxable) or for investment dividends (taxable).

or for capital gains (non-taxable), or a mixture thereof ... hence IRDs stance, I imagine. So writing to them may well open one up to a thorough looking at (in terms of the share buying/selling history and intentions).

[lissica]

That's exactly what I mean. I've never dabbled in shares but have bought a considerable quantity of property trust stuff lately. I won't ever sell, it's permanent to the grave with me stuff. I have received mixed advice about the deductability of brokerage. I just assumed it was deductable as is any other business expense. Perhaps not? I rang IRD who said I would have to write to them as the answer could be yes or no, but wouldn't elaborate on the criteria for deductability. Any enquiry on this needs to be in writing. Seems a simple matter, but obviously it isn't.

Even as a long term holder (ie for dividends) it should be deductable, but you can't claim GST.

It would be like deducting the lawyers and agents fees when selling/buying a rental property.

[fungus pudding]

Even as a long term holder (ie for dividends) it should be deductable, but you can't claim GST.

It would be like deducting the lawyers and agents fees when selling/buying a rental property.

It should be - but is it? GST s different. There is no GST charged on financial transactions such as share brokerage so there is nothing to deduct. Residential property is an exempt area as normally no GST is charged on rents, although the services such as sales commission and legal fees do have GST added. Property investors can opt to register for GST and claim input tax - including 11.11% or one ninth of the purchase price. From then on they must pay GST on rent collected and GST on eventual sale. Commercial real estate is different, and almost all investors are registered GST entities. No problem claiming GST from those transactions.

[777]

The amount of tax you would save on deducting it from your other income is not worth the hassle of the prospect of the IRD investigating all your share transactions to determine whether you are a trader or not.