Forex Trading & End of Financial Year Tax

Please seek professional tax advice for your own personal taxation matters. I am NOT a tax professional.

Here in Australia our financial year ends mid-year on 30 June. In preparation of my personal tax return to the Australian Taxation Office I have to declare the amount of sales, purchases, expenses as well as opening stock and closing stock values of my forex trading activity. Apart from the main forex trading transaction found within my account I also declare expenses directly related to my forex trading, such as internet, software, subscriptions (eg. data), journals, telephone, depreciation on computer or other equipment (etc).

As the tax return requires amounts to be denominated in AUD I always opt to have my accounts denominated in AUD to help ease the burden of calculating everything back to AUD at the end of the financial year. Thankfully with the help of MetaTrader I have been able to create a script that calculates the amount of sales and purchases as well as the opening stock and closing stock values all in AUD ? regardless of whether the currency being traded is non-AUD (the script is found below). This helps me to accurately calculate my profit/loss at the end of the financial year using AUD sales, purchases, opening stock and closing stock values.

By using the data output from my MT4 script it helps me to fill out section 15 ? Income ? Net Income or Loss from Business in my Tax Return for Individuals (obviously if you trade through an entity such as a company or trust you will need to fill out their tax returns in a similar area).

Anyway, here?s an example of what I have done and I ONLY write this here for my OWN personal benefit as tax returns are only done once a year and this time next year I?ll completely forget what to do:

This is for completing an Individual Tax Return 2012 using the ATO?s e-Tax software and may change next year

1. Description of main business or professional activity: ? Financial Asset Investing ? (I couldn?t find anything else that even came remotely close)
2. Number of business activities: ? 1 ? (obviously if this is the only activity you do then it would be 1, but if you have more than one business activity you?d fill this out according to the number of activities)
3. Business Name: ? XXXX XXXXXX ? (put your full personal name here and total up the accounts accounts which are in my name)
4. Australian Business Number (ABN): ? 00 000 000 000 ? (if you have an ABN insert it here)
5. Address section: ? Fill in your address ?
6. Status of business: ? Ceased? Started? Neither? ? (did you start trading this financial year? = Started; Have you stopped trading? = Ceased; Are you still trading from previous years? = Neither)
7. Did you sell any goods or services using the internet? : ? No ? (if you?re selling items or are offering a service through the internet then tick ?yes?)
8. Income received where no tax was withheld section: ? (not applicable)
9. Business Income section: ? NPP = Non-Primary Production
   • (Description) Total Sales ? (NPP amount) $XXX,XXX
   • (Description) Total Swap Income ? (NPP amount) $XXX
   • (Description) Total Interest Rec?d ? (NPP amount) $XX
10. Business Expenses section: Opening Stock ? (NPP amount) $XXXX
    • Purchases & Other Costs ? (NPP amount) $XXX,XXX (purchases)
    • Closing Stock ? (NPP amount) $XXXX + Contractors & Commissions ? (NPP amount) $XXXX (brokerage amounts)
    • Depreciation expenses ? (fill out this section accordingly)
    • Other expenses sub-section ?
      • (Description) Swap charges ? (NPP amount) $XXX
      • (Description) Internet ? (NPP amount) $XXX
      • (Description) Telephone ? (NPP amount) $XXX
      • etc etc
11. Business reconciliation items section: ? (not applicable)
12. Other business and professional items section: ? (not applicable)
13. Trading stock election: ? No ? (valuation is generally purchase price)
14. Enter the number of hours it took: ? XX

To calculate the needed values required in the tax return I created this MetaTrader 4 script. There are a couple of things I need to be aware of next time I run this though:

1. Go to the Account History tab in the Terminal view.
2. Right-click anywhere there and select All History.
3. Open up the eofy.mq4 script and edit the eofyStr variable to read the final minute of the financial year being calculated (it?s in the format: YYYY.MM.DD HH:MN).
4. After compiling the script run it on any chart and the figures will output in the Experts message area.

Here?s the eofy.mq4 script:

Source: http://currencysecrets.com/2012/forex-trading-end-of-financial-year-tax/?utm_source=rss&utm_medium=rss&utm_campaign=forex-trading-end-of-financial-year-tax

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