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Margin Loan draw down fee Tax treatment

Discussion in 'Accounting, Tax & Legal' started by geno1, 5th Sep, 2010.

  1. geno1

    geno1 New Member

    Joined:
    6th Aug, 2009
    Posts:
    2
    Location:
    QLD
    How are Shares Margin loan draw down/transaction fees shown for Tax Deductability Purposes.

    Example have Commsec Margin loan, and each loan transaction for Share Purchase / Sale,:confused: incurs transaction fee of $10 Fee. Do I Claimed this as

    1. Bank charge and claim in year incurred ??
    2. Capital Gain / Loss & have to wait for sale of the Shares to claim ?
    3. Or is it calssed as Loan esatablisment cost and deduct in the year occured or if over $100 over 5 years?


    :confused:
     
  2. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    Different providers use names to mean different things.

    However, a "cost per trade" indicates an incidental cost of acquisition or disposal and hence is included in the second element os the cost base for CGT.

    If you are a share trader, it is deductible under either trading stock or section 8-1 depending on its exact nature.

    The 5 year write-off is for capital costs of establishing a loan - the up-front costs of taking out a loan or its renegotiation generally.

    Again ... providers give names to facilities which may be misleading so you need to check exactly how the fees are applied.

    Cheers,

    Rob
     
  3. geno1

    geno1 New Member

    Joined:
    6th Aug, 2009
    Posts:
    2
    Location:
    QLD
    Yeah thanks Rob,
    I would not say I am a trader more of a punter :eek: he he he, try to hlod most stocks long term or 12 months at least but if do buy stock after it drops and makes a quick turn around will take opportunity to crystalizie the quick profit.
    So looks to me like is capital cost, and have to wait for sale to claim cost base ? for working out capital Gain /Loss.

    Probally confirm what i was thinking but was half wishing, was an option to consider it as a ongoing Bank charge / yearly write off ! so could get it out the way and also save on record keeping.

    Any way thanks for your help

    regards
    Geno :)
     
  4. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    It still turns on exactly what the financial provider is charging you for.

    For instance, if this were merely an admin cost for assigning the legal title (or creating a charge) over YOUR shares to the margin loan provider then this may be treated differently.

    e.g. you own shares but apply them as security against a margin loan then this could be a borrow cost.

    You need to read the contract small print.

    Cheers,

    Rob