Trading Tax Q&A - Sep/Oct 2011

Home

Articles - Taxes

Resident tax expert Adrian Raftery, aka ‘Mr Taxman’, answers readers’ most pressing trading tax questions.

Q: I am thinking about setting up a self-managed super fund. If I do, can I use my super monies to trade?
A: A self-managed super fund (SMSF) is a type of super fund that members manage for their own benefit. If you have the time and expertise to manage your investments, and advisors you can call on, setting up a SMSF might be an option for your retirement future.

A main benefit of a SMSF is having freedom of investment choice about how and where to invest your superannuation monies. The funds are growing in popularity as members’ balances rise, and as people are becoming more knowledgeable about managing their retirement savings. More than 27,000 new SMSFs were established last year. Being able to invest super monies in particular assets means that similar growth is expected for some time yet.

However, SMSFs cannot operate trading entities. You need to carry out share activities as an investor rather than as a trader. You can purchase (and sell) exchange-traded options as part of a hedging strategy, but any premiums paid (or received) must be shown as CGT events.

Whilst you can invest your super monies in shares, options and contracts for difference (CFDs), it must be in accordance with your written investment strategy for the fund and in compliance with the SIS Act that regulates SMSFs.

Be careful with investment in CFDs. If you deposit funds with a CFD provider as security for the fund’s obligations to pay margins, you contravene the SIS Act, because you are effectively providing a charge over fund assets...

Excerpted from an article originally published in the Sep/Oct 2011 issue of YourTradingEdge magazine. All rights reserved. © Copyright 2011, Your Media Edge Pty Ltd.
If you are a subscriber to YourTradingEdge magazine, you will receive this article in your Sep/Oct 2011 issue of YTE. If you are not a subscriber, click here to subscribe, or to purchase this issue as a single back issue, click here.

» Trading Tax Q&A -May/Jun 2012

Resident tax expert Adrian Raftery, aka ‘Mr Taxman’, answers readers’ most pressing trading tax questions.Q. I currently trade about 100 trades a month. I am starting to worry about getting all my records in order for my accountant for tax purposes, because organising them by hand is starting...

» Trading Life - Andrew Barnett

Andrew Barnett shares his trading life.Let me start by saying that being a currency trader is, in my view, the best career in the world. The ability to conduct my business from any location creates a unique business opportunity. I am very grateful for the career I have. I live in Noosa Heads in...

» Barchart announces new exchanges

Barchart has announced the addition of several new International Exchanges as well as US and Canadian equity options data, plus several new sets of fundamental data and news.

» Admiral Markets launches in Australia

The world’s leaders in precious metal investment head to Sydney.

» ASIC releases exchange traded funds report

ASIC released a report on ETFs today which outlines how this growing industry is regulated in Australia and the impact of proposed international principles to address concerns by overseas regulators.

» Free ticket offer - Perth Trading & Investing Seminars & Expo

Knowledge is power when it comes to protecting and growing your wealth. And there has never been a more critical time to immerse yourself with all the information and insights you need from trusted, reliable experts – and this is on-tap at the Perth show.