Forex trading is a legit business in Australia and there are so many traders who are in this type of venture. When you look around there are tons of success stories of people who have achieved financial freedom through Forex trade. In some countries, Forex trading is illegal as it is considered to be a risky business. However, in some other countries, it is actually encouraged and has been made a tax-free activity. If you are an Aussie and you are involved in Forex, it is important to know your tax obligations.
Forex is an acronym for Foreign Exchange Market and is one of the most lucrative business ventures around the world. There are different players in this form of trade including Forex brokers, Central Banks, insurance companies and so much more. Ideally, to be able to trade, you will need a combination of two currencies to form a Forex pair. As a trader, you will buy a certain currency using your preferred currency and hope that your prediction favours you.
One of the main advantages of Forex trading is the fact it is open to anyone. All you need is a device that can connect to the internet and you will be free to trade. There has been an increase in Forex trading in the recent past and there are many brokers, traders and investors on the market.
Are Forex Trading Profits Taxable?
Australia is one of the countries which recognize Forex trading as a legitimate income-generating activity. As such, the profits you will make from this trade are subject to tax. However, there are other countries that have completely banned Forex trading like South Korea and Nigeria. Australia has quite a number of regulated brokers in the Forex market. The Australian Securities and Investments Commission is the government agency that is responsible for regulating Forex trading in Australia. The relevant financial service laws are used to regulate the industry so as to ensure that all participants are protected.
As such, Forex trading is classified as assessable income for tax purposes. While there are no specific rules that have been set for Forex trading, the regulations for stock markets are the ones applied. However, there is a Forex trading Tax, which is meant for non-residents in Australia who have a source of income in the country. If you are a foreigner and wish to trade through a local broker in Australia, you will be expected to pay tax on the profits made.
You will only be expected to pay taxes if you have made profits within the tax assessment year. Retail trading is a part of Forex trading and as such there are other tax rules which are applied. In the Forex market, the prices keep fluctuating and as such, there are profits and losses made. The tax rules are applied to the losses or gains which are realized for your trade. From these indications, it is possible that the Forex gains and losses can be considered capital gains. For the CGT to be applied the trades need to be held for more than a year.
Tax Experts for Forex Traders
Accurate Business & Accounting Services has been working with a number of Forex traders and investors. The tax computation may appear to be complicated but our experts are here to help you with the best services. Talk to us and we will help you beat the tax deadline.