Definitely! The main thing day traders need to keep in mind is that their broker can be tracked automatically. Meaning when you make trades, the portfolio tracker is automatically updated with the new trade. Because given just how many trades day traders make, it would not be feasible to have to input the details of every single trade manually. If you are finding Sharesight aren't suitable, you can try Navexa which actually offer cheaper premium plans: Join Navexa for FREE or use code 'CA10' for 10% OFF any Premium Annual Plan: www.navexa.io/?source=conalan
Buying stocks might seem easy, but picking the right one without a solid plan is tough. I've been trying to grow my $100K portfolio, but the tricky part is not having clear plans for when to buy and sell. Any tips on this would really help.
This was what I was looking for! Thank you for your very thorough explanation and also your speech speed is spot on! Aussie investors need more informative videos like this! 👍👍
Just seen this, absolutely brilliant. Cleared up a lot of confusion, I can now calculate what I should end up with 👍 (I sold off a heap of shares that have all been held for over 1 year) Thanks for your efforts 👌
Great question, Istiak! Generally speaking, re-invested dividends are treated just like regular dividends. This means they are still counted as income and should be added to our taxable income for the year. But remember, don't take this as tax or financial advice. You should definitely consult a licensed professional for any personal questions 😁
Nicely and concisely explained. The only video that helped a beginner like me. I am just thinking, do I need to fill up W8BEN form if I invest on NDQ and IVV on ASX market.
From my understanding, the Free Stock Promotion is treated in the same way as purchasing a regular share but the purchase price is assumed to be $0. So, if you were to sell that share in less than 12 months, the sale price of the stock would be considered a capital gain. This is not tax advice so definitely consult a tax professional before taking any action! 😁
Hey mate nice video, but would you mind clarifying what is aussies pay on tax for USA stocks of profit earnt that isn’t from dividends just selling stocks in general? Cheers mate appreciate it
Thanks for the comment, mate! As long as Australians fill out the W8-BEN form, which indicates they want to take advantage of the tax treaty benefits between the US & AUS, they don't need to pay any US Sales Tax when a US share is sold for a profit. But this isn't tax advice so make sure you speak to a tax professional about his 😁
Hey guys, one small question. By the end of the financial year, if I've made money from the increase in share prices from the current stock I have invested in, will I have to pay a CGT on the 'profit' even though I haven't sold my shares in that company? (I'm trading through STAKE)
Great question and great to hear you are using Stake! You do not need to pay CGT on the appreciation of an asset until the gain has been realised. In other words, if you have not sold the asset then you will not be required to pay CGT :)
If you haven't sold/withdrawn funds from your brokerage account come tax return time, do you have to declare this is taxable income? Do you have a video on how to declare this sort of thing for tax returns? Thankyou!!
(Not financial advice, i may be wrong) but my understanding is that: if you have bought shares, and they have since increased in value, but you have not yet sold your shares come tax time, then the potential profit/'gain' is called 'unrealised gains' and is not taxable until you sell those shares for a real profit, that real profit you made from selling (not including your initial investment/'capital') is now a 'realised gain'. So now that you've sold for a profit, you should have your initial investment/'capital' back AND your profits on top/'capital gains', creating the total sum you sold for. Now that you made money/profits/'capital gains', (similar to a business making money) the taxman wants you to pay him a piece of your pie and does so by creating a TAX specifically for 'capital gains', this TAX is called the 'capital gains TAX' There's a website called 'investopedia' which can help make sense of all the terminology, i'm trying to learn about it all as well so don't quote me =] hope this helps with some terms at least
Great question! Sorry for the delay in replying but it looks like Reepix has you covered! Very well said by them and as far as I am aware, what you have said, Jess, is correct! Unfortunately, I do not have a video on how to declare this sort of thing, as I now have an accountant file my taxes each year and I would highly recommend it, especially, if you are starting to invest but that sounds like a pretty good video idea, so if I get enough interest I may make that video :)
@@ConnorandAlan hi mate, Lets say I have $1100 profit from 50 trades (by investing $8900) I did for 2020 july-2021 June and I have not made a withdrawal to my bank for that gains out of my trading app and as per my statement from app my realized equity $10000 and unrealized equity is $10,040 (for unclosed trades). DO I need to declare my CGains of 1100 for my financial year income?
Immediately, as you open the app, you should be on the Dashboard page. The big number at the top of the page is the current value of all your holdings combined and the number under that is your appreciation/depreciation in value overall that day. Hope that helps! 😁
Great question but unfortunately, I am not 100% sure :/ Something to think about is that potentially the way you conduct your trades may impact your tax treatment. For example, when buying shares, individuals who are considered to be holding shares as an investor are treated differently compared to those carrying on a business as a share trader. So there may be a similar separation for CFD traders. I would recommend speaking to a tax professional/financial advisor.
when you say you get taxed when you sell do u mean when the money reachs your bank account or when it just on your balance in the app ( i use trading 212)
Hey Connor, Nice Video, Quick question I got the point for Capital Gains Tax and Dividend, but what about when I don't sell the stock or Dividend, I received I use it in buying the same stock again, mainly not getting the money in my bank account, So still I have to include that Capitals gain/profit;/dividend in my salary?
Great question, William, and sorry for the delay! Generally speaking, you'd need to determine if you're a trader or an investor as this will determine your tax treatment. Take a look at this article for some further context: www.ato.gov.au/General/Capital-gains-tax/Shares,-units-and-similar-investments/Shareholding-as-investor-or-share-trading-as-business-/
What if you buy and sell multiple times in the year? The same stock or other stocks like day trading or swing trading? Do we need to record each trade or just the total increase?
Brilliant video! very well explained and simplified. You have just earned yourself a new subscriber. I am currently looking for a new broker that deals in fractional shares. I have seen your review on Steak. My question is what is the customer support service like with Steak? Have you had any issues that needed support?
Wow! Thank you so much for the kind words, Dave and welcome to the channel! With regards to your question, as someone who pays close attention to detail, I have contacted Stake's customer support on quite a few occasions wanting to better understand how something works. Each time I contacted them, they would usually reply within 24 hrs and I have found their assistance to be sufficient in answering any questions I have.
Hey Lads! If you were a dividend based investor, do you receive any tax discount for holding the shares for over a year or is it just the flat 15% withholding tax no matter what. (before AUS tax becomes involved). Thanks and keep up the awesome videos!
Great question! As far as I am aware, the CGT Discount only applies to capital gains which can only be realised once an asset is sold. So the dividend income you receive would not be classified as a capital gain but rather, it would be classified as income. As far as I am aware, there is no discount for dividend income even if you have held the asset which produces the dividend for longer than 12 months. With regards to the specifics of the 15% US withholding tax, it is probably best to consult a professional come tax time! Hope this helps :)
hey guys, thanks so much for these videos, i plan on following your guide and using the referral code for stake and getting started with vanguard ETF investing. i have a question about tax in australia - do i need to declare or change the way i do my yearly tax return once i start adding funds into stake and buying into ETF's? is the annual % "gain" from investing into VOO considered taxable income (or capital gain i guess?) and does it provide dividends? hope this makes sense i'm very new to all this, and thanks again!
Thank you so much for watching! With regards to your question, it is probably best you speak with a tax professional but in my situation, the only time my taxable income increases is if I receive a dividend or I sell shares for a profit (meaning I sell them for more than I bought them for). Hope this helps :)
@@ConnorandAlan thanks for the reply guys! i don't plan on selling or day trading or anything else, just depositing into Vanguard, so i'll check whether they pay dividends. thanks again!
Am i able to sell a stock that has captial loss but will be enough to have the money that will tranfer back to my bank account to pay my taxes on the finaicail year? cause i dont think will have enogh cash on the side to pay?
Sorry for the delay in replying! While I can't give advice on your situation specifically, one could sell off a stock position at a loss and that would not only provide them with additional capital to go towards their tax bill but the realised loss could also offset their capital gains which could lower their tax bill. Hope that helps a little. But I would highly recommend you consult a tax accountant/financial advisor.
So if you buy stock and hold for 1yr, wouldn't you get taxed on the purchase at EOFY to start with? You can also place 25k into your super tax free to lower your taxable income..
Thanks for the content! I would like to ask how do you include the currency conversion cost in your cost base for buying and selling stocks and fee for the W8 with Stake?
Really great question Valeriia! Unfortunately, when it comes to calculating your cost base, it can be quite complicated so I wouldn't feel comfortable offering advice. It would be best to speak to a tax professional. Sorry I couldn't be of much help :(
@@ConnorandAlan Thanks for responding Connor! Understandable. It is really tricky and annoying! If you have experience please could you explain us how to consider promo-gift shares from Stake? Do you calculate full amount as a capital gain or just a profit after cost base(the price at the time you were given a share)?
Thanks so much for this informative content :) Got a question tho as a Stake investor here, if you got profits from stocks and some of them were taken out and sitting on Buying power and not withdrawn to Aus bank, would that be taxed? Really curious about it. Thanks :)
Thanks for commenting, Henry! The moment those assets (stocks in this case) were sold, a taxable event was triggered. So even though the cash hasn’t been withdrawn to your Australian bank account, you will need to declare those trades on your taxes 😁
Just to clarify, does that mean even though a 15% tax fee comes out when you receive a dividend, you still have to pay tax on the dividends come tax time in Australia ?
No, fortunately! When you pay that 15% withholding tax in the US, you should be able to claim a Foreign Income Tax Offset when filing your taxes here in Australia which is designed to avoid double taxation 😁
This is very informative. thanks for this video! I want to ask, do I still need to pay tax for dividends even if I don't put it in my bank and leave it there on Stake? Thanks!
I’m so glad you found it informative! And generally speaking, yes, you will still need to include all dividend, even if they stay in your brokerage account, in your assessable income 😁
Hey guys, recently turned 18 and purchased some dividend stocks on stake. I received my first dividend and the withholding tax rate is at 41%. Any way I can reduce this?
Sorry for the delay! It is great to hear that you have started investing! hmmm, I haven't seen that before... I initially thought it may be due to you not providing your TFN when setting up your account however from the sound of Stake's FAQs it doesn't seem as though this would impact the withholding :/ The only thing I can suggest is to contact Stake's customer support on ausupport@hellostake.com, assuming you haven't done so already. Sorry I couldn't be of more help!
I believe so! Stake do offer a SMSF account type however I am not familiar with the sign up process. I would imagine it is more involved than a regular account haha
When we US sell shares we get US dollars back. We pay the taxes in AU after conversions but when we bring our US dollars back in our AU account, do we need to pay taxes of currency change gain/loss?
To clarify, I am not taxed based on the number of trades I've made, correct? i.e I can buy/sell stocks as many times as I want as long as I comply to the PDT rule.
Generally speaking, when a dividend is paid out it is to be counted as income and thus subject to one's individual tax rate, even if that dividend is then reinvested. Once the shares are eventually sold, any profits will be subject to CGT. Remember, this is not financial advice and you should always consult a professional when dealing with your specific situation.
Dumb question alert! So basically, you dont get taxed as long as you dont sell, right? I'm all new to investing, I'd appreciate anyone who can clarify :)
There are no dumb questions, Charles! Generally speaking, yes. If we consider shares, you may need to add any dividends you receive to your assessable income but you will not have a capital gain/loss until you sell 😁
How does it apply if you buy shares multiple times of the same stock throughout the year? E.g. if i buy 50 shares in january then another 50 in February, and i sold say 60 shares january the following year, would that mean i get the 50% discount on 50 of those shares but pay the full rate on the other 10? Or would they make me wait until 1 year has passed since my latest purchase of a stock, period?
Great question and apologies for the delay in replying! As far as I am aware, it is how you described it first. You would get the discount on 50 of the 60 shares sold! But I would still recommend confirming with a professional :)
Heyy!! As an Australian citizen and Stake investor, this is great information thank you! I do have a question about Stake, I am still a minor and are investing underneath a parent’s name on stake. When I become legal, how would I transfer ownership to my name? Thanks for your help!!
Hey mate, I'm a bit confused. I was under the impression that CGT is not added directly to regular income Eg. If I earn $30000 as salary, $1000 from dividend and $5000 capital gain (CG), then $31000 is divvied up on the tax scale, then 30% of CG is added on top of it (15% if I held on for more than a year). So, $2432 taxed on regular income + $1500 CGT (or $750 CGT discounted).
Thank you for voicing your confusion Reji because if you are confused, I am sure there will be others! Considering they call it the Capital Gains TAX, I can understand why you were under the impression that is was separate from your regular taxable income however this is not the case. The ATO put it this way on their website, "although it's referred to as capital gains tax (CGT), this is actually part of your income tax, not a separate tax. When you make a capital gain, it is added to your assessable income and may significantly increase the tax you need to pay." Click here to view their CGT information page: www.ato.gov.au/general/capital-gains-tax/ Here is another video made by Conail, a financial advisor from What if Advice, which I believe explains CGT pretty well: ruclips.net/video/SO-vopDVHng/видео.html Hope this helps :)
@@ConnorandAlan I finally figured it out. CGT is calculated (discount applied if eligible) and then the final amount is added to the individual's income. Thanks for a bit more clarity on the subject. I was under the impression that CGT figure was tax payable.
Thanks for the video! It was really helpful:) one thing I was confused is about dividend and tax calculation on stake. Is the dividend written in green colour total amount of dividend including taxes? For example, at 3:01, the given dividend was $13.21 and then $1.98 was paid for tax. Does that mean the actual amount I got is $13.21(A)-$1.98(B)? I was confused because Sharesight calculates the gross amount = A+ B, not A-B. Could you please clarify this? Thanks~!!
Sorry for the delay in replying but I am glad you found the video helpful, Jeeyun! With regards to the first part of your question, yes! The green amount is the full dividend in USD and the red amount is the 15% withholding tax. So in this example I was left with USD$11.23. Hmm that is strange because on my end Sharesight have recorded the amounts correctly. Perhaps, you are looking at the dividends in AUD and that may be causing the confusion?
Great question! Generally speaking, any gains realised through the sale of shares are subject to CGT and any dividends paid out are counted as assessable income, even if the funds are not withdrawn for the platform. Hope this makes sense! Remember, this is not financial advice and you should always consult a professional when dealing with your specific situation.
Great question but unfortunately I am not exactly sure :/ Maybe someone in the comments may have some information? Otherwise, you could try speaking with a qualified tax/finance professional 😁
Great question! Someone in this scenario would not have to pay Capital Gains Tax until the asset is sold however they may have to pay tax on any dividends they receive. This is not tax or financial advice and I would recommend you consult with a professional :)
What happens if you buy 100 Apple shares first, then buy another 200 Apple shares 6 months later, then you sell 150 Apple shares 12 months after the first 100 shares?
Great question! We had a similar question about a week ago and as far as I am aware, as long as the first lot of shares were sold after 12 months, you would received the discount for those and the other 50 shares that we only held for 6 months would not receive the discount :)
Hi, I'm a newbie with investing. With share sight, you said it's free with 10 holdings - can you explain what this means a bit further? Does this mean for example, 1 holding = VAS? 2 holdings = VAS and VGS? Thank you!
Of course! What you have written is exactly right. A holding is a type of asset (i.e. VAS, AAPL, TSLA or SNAP) and the restriction of 10 holdings does not restricted the number shares you may own of 1 specific company but rather the number of different companies you own. I hope that makes sense 😁
Great question! Someone in this scenario would not have to pay Capital Gains Tax until the asset is sold however they may have to pay tax on any dividends they receive. This is not tax or financial advice and I would recommend you consult with a professional :)
does anyone know how i can convert currency from USD to AUD for trades i've done in the US? I'm confused as to whether one is supposed to use the currency conversion rate at the time of trade (realisation of profit or loss) or whether i just use the present day conversion rate? or do i only do the conversion once its converted into australian dollars?
Great question! And again, apologies for the delay! When you are taxed on investments (like shares) you will not have any tax come out automatically as you most likely do at your job. Instead, at the end of the financial year, your capital gains and dividend income will just be added to your taxable income and then the additional amount you owe in tax will then just be included when you file for your taxes :)
Hi i do trading through app I am just wondering do i still pay tax if i dont withdraw in my Australian account (it is still in stake Acc) I just did few selling (made capital loss) and earn divident For 3 yrs
Man, I signed up to stake and got an absolute DUD of a share that was barely worth $3. I thought GoPro was the lowest you could get, but apparently not. Looking forward to when they add the ASX though. AVZ to the moon🚀
Oh no! That's unfortunate :/ Yes, Stake recently updated their referral program to offer Nike, Dropbox, GoPro and a mystery stock. So are we! We are hoping to get our hands on the beta version of their ASX brokerage service and will be posting content about it so be sure to keep an eye out for that!
Thanks for commenting and sorry for the delay in replying! Hypothetically, if an Australian individual wasn't earning any other income but sold some shares for a profit of 10k, their assessable income would be 10k which is below the minimum taxable threshold and may not be required to pay tax. But this is not tax advice, just an example! I would highly recommend you speak with a Tax Professional if you do require advice :)
Hang on... I'm pretty sure without completing a W-8BEN form, you may wind up paying 30% of proceeds to the IRS upon sale of US stocks... If so, you should really make an adjustment to this video before people are blindsided by that
Great question! Of course, for an individual US citizen filing their income taxes I believe they would have a progressive tax system just like we Australians. But this 15% withholding tax is for non-US citizens profiting off US based shares. This article may provide a little more context: www.tved.net.au/index.cfm?SimpleDisplay=PaperDisplay.cfm&PaperDisplay=www.tved.net.au/PublicPapers/February_2002,_Accountants_Education_Channel___Tax,_The_New_Protocol_to_Australia_USA_Double_Tax_Treaty.html
Great video! If I invest long term my self managed superfund and only takes out in 30+ years, what CGT % do I need to pay? Is there a difference between investing with my super and with cash with the same scenario? (Investing long term - dollar cost averaging)
Great question, Anne, and judging from your question you are definitely moving in the right direction when it comes to finances! There definitely is a difference with regards to tax when you compare investments outside and inside of super. Generally speaking, inside of super one would pay 15% in tax on contributions and gains whereas income outside of super is taxed up to 45% (excluding the medicare levy). On top of that, if one were to hold an investment for longer than 1 year outside of super they will get a 50% Capital Gains Tax (CGT) discount (meaning they will only be taxed on half of the gains) whereas inside of super they will get a 33.33% discount (meaning they will only be taxed on 2/3 of the gains). I hope that makes sense, check out this video I made which explains what I have described above with an example: ruclips.net/video/4AVrwFjr9Ys/видео.html
Hey Connor! It's Loic here. I tried posting a comment but kept getting 'comment failed to post' as I believe it was too long. There appears to be a 400-500 character limit on youtube which I was not aware of so I stuck it in pastebin instead. pastebin.com/92MJA5LN
Loic!! Thanks so much for commenting and subscribing to the channel and sorry for taking so long to reply to your comment. For some reason I completely missed it! I read through your comment on pastebin and from what I understand, your reasoning checks out. But you know what, I think Interactive Brokers may have removed their inactivity fee?!? If this is the case, they may be one of the cheapest brokers I have ever seen!! Let me know if this is the case but regardless, I think I will probably open an account with them to try it out for myself! How are you? It looks like this comment was sent over a year ago so how did you go opening your investment? Did you end up using IBKR?
@@ConnorandAlan Hey Connor! (or Alan? Don't know who checks the comments) It has indeed been over a year, took a while but thanks for taking the time to reply to my comment. I think your subscribers have doubled last I checked! I did indeed end up going with IBKR and yes they removed their monthly $10 inactivity fee as of July 2021 I think it was, which is great! The brokerage fee is even better than I thought as I was previously using a Fixed account (set by default) which charged $1USD (which was already very good) per trade but I found I could change to Tiered in my account settings and now it's charging me $0.35USD per trade which is even better. The FX fee I've since discovered is actually negligible. I thought it was a min. of $2USD they charge you each time you want to convert currencies but this does not apply to trades. So for example if I specifically ask IBKR to convert $1000AUD to USD I believe I would be charged the $2 (haven't actually tested this so can't confirm), but if I have $1000AUD in my account and then buy some stock listed on the NASDAQ for $500USD it would automatically convert the necessary amount of AUD to USD to buy the stock and I am not charged the $2! (This I can confirm) For Fixed accounts you are not charged an FX fee but for Tiered it's 0.002%, so converting $1000 would cost you 2 cents which is basically nothing. That's why I said it's negligible. I honestly don't know why you would stick with a Fixed account type over Tiered, haven't seen anything where Fixed is better yet, although a Fixed account type is still way better than any other broker I've seen. Their FX conversion rates basically mimic what you see on google, and this alone already makes IBKR so much better than other brokers in the long run. The only other broker I've seen do this is Charles Schwab. I remember I tried opening an account with them last year but ran into some issues and so was never able to test them myself but I've been happy with IBKR. All in all I'm paying about $0.50AUD in commissions per trade. The biggest downside I would say of IBKR is their horrendous web UI and just how slow everything feels to load. They have something called TWS (Trader Workstation) which seems more responsive and better suited for day traders but man the UI looks like something straight from the early 2000's. I don't day trade so it's not too much of a problem for me and I just put up with the sluggishness of the web portal. Let me know of any other thoughts you may have and how you go if you do open up an IBKR account!
hi is this platform suitable to day trade us stocks.
Definitely! The main thing day traders need to keep in mind is that their broker can be tracked automatically. Meaning when you make trades, the portfolio tracker is automatically updated with the new trade. Because given just how many trades day traders make, it would not be feasible to have to input the details of every single trade manually. If you are finding Sharesight aren't suitable, you can try Navexa which actually offer cheaper premium plans: Join Navexa for FREE or use code 'CA10' for 10% OFF any Premium Annual Plan: www.navexa.io/?source=conalan
Use IBKR
Buying stocks might seem easy, but picking the right one without a solid plan is tough. I've been trying to grow my $100K portfolio, but the tricky part is not having clear plans for when to buy and sell. Any tips on this would really help.
Great video! Can you please talk more about the tax treaty between US and Australia in regards to US dividends?
This was what I was looking for! Thank you for your very thorough explanation and also your speech speed is spot on! Aussie investors need more informative videos like this! 👍👍
Wow! Thank you for the thoughtful comment, Hayley! I really appreciate the kind words and am glad you found the video helpful 😁
Just seen this, absolutely brilliant. Cleared up a lot of confusion, I can now calculate what I should end up with 👍 (I sold off a heap of shares that have all been held for over 1 year)
Thanks for your efforts 👌
Thanks so much for the kind words, Daniel!
Cleared up some knowledge gaps especially how cgt is calculated for international stocks cheers
So great to hear! Thanks so much for commenting :)
Extremely informative, Aussies needed this
Thank you! Comments like these really mean a lot 😁
Well done guys on this video! Intergrating Stake and Sharesight is pretty important to getting your capital gains and losses right!
You can say that again! When I first discovered Sharesight, it was such a relief because of how difficult it is to track without it!
I saw the video to know how tax is paid for re-invested dividend? Please make a video about this.
Great question, Istiak! Generally speaking, re-invested dividends are treated just like regular dividends. This means they are still counted as income and should be added to our taxable income for the year. But remember, don't take this as tax or financial advice. You should definitely consult a licensed professional for any personal questions 😁
Nicely and concisely explained. The only video that helped a beginner like me. I am just thinking, do I need to fill up W8BEN form if I invest on NDQ and IVV on ASX market.
So glad to hear it Aleem! With regards to your question about the tax form, I don't believe so but your broker should be able to tell you :)
all of your videos have been really helpful!! thanks a lot
We are so happy to hear that! Thanks for commenting, we really appreciate it :)
Very well explained. Thanks!!
Glad it was helpful!
Thanks heaps for answering this question!!!! Love the content guys!!
Our pleasure! We are so glad you are enjoying it!
Brilliant video Connor! Thanks for that.
Is there any tax liability on the free stock from stake?
From my understanding, the Free Stock Promotion is treated in the same way as purchasing a regular share but the purchase price is assumed to be $0. So, if you were to sell that share in less than 12 months, the sale price of the stock would be considered a capital gain. This is not tax advice so definitely consult a tax professional before taking any action! 😁
Thanks. Can we also get 50% on dividends as well if holding more than 12 months?
Great question Hong! As far as I am aware, you cannot get the Capital Gains Discount on dividends :/
You don’t hold dividends you just receive it as cash or partial shares
Awesome video bro, Taxes can be really scary sometimes and I'd hate to get in trouble by accident.
Thanks mate! You've got that right! Hopefully this video helps some people become more knowledgable :)
Have been looking for this, awesome vid.
I had been too!! and so once I had figured it out, I knew I had to make a video about it :) hahah
Hey mate nice video, but would you mind clarifying what is aussies pay on tax for USA stocks of profit earnt that isn’t from dividends just selling stocks in general? Cheers mate appreciate it
Thanks for the comment, mate! As long as Australians fill out the W8-BEN form, which indicates they want to take advantage of the tax treaty benefits between the US & AUS, they don't need to pay any US Sales Tax when a US share is sold for a profit. But this isn't tax advice so make sure you speak to a tax professional about his 😁
Hey guys, one small question. By the end of the financial year, if I've made money from the increase in share prices from the current stock I have invested in, will I have to pay a CGT on the 'profit' even though I haven't sold my shares in that company? (I'm trading through STAKE)
Great question and great to hear you are using Stake! You do not need to pay CGT on the appreciation of an asset until the gain has been realised. In other words, if you have not sold the asset then you will not be required to pay CGT :)
@@ConnorandAlan Absolute legend, thank you for replying. Keep up the good work boys
Not a problem mate! Thanks for commenting :)
If you haven't sold/withdrawn funds from your brokerage account come tax return time, do you have to declare this is taxable income? Do you have a video on how to declare this sort of thing for tax returns? Thankyou!!
(Not financial advice, i may be wrong) but my understanding is that: if you have bought shares, and they have since increased in value, but you have not yet sold your shares come tax time, then the potential profit/'gain' is called 'unrealised gains' and is not taxable until you sell those shares for a real profit, that real profit you made from selling (not including your initial investment/'capital') is now a 'realised gain'. So now that you've sold for a profit, you should have your initial investment/'capital' back AND your profits on top/'capital gains', creating the total sum you sold for.
Now that you made money/profits/'capital gains', (similar to a business making money) the taxman wants you to pay him a piece of your pie and does so by creating a TAX specifically for 'capital gains', this TAX is called the 'capital gains TAX'
There's a website called 'investopedia' which can help make sense of all the terminology, i'm trying to learn about it all as well so don't quote me =] hope this helps with some terms at least
Great question! Sorry for the delay in replying but it looks like Reepix has you covered! Very well said by them and as far as I am aware, what you have said, Jess, is correct!
Unfortunately, I do not have a video on how to declare this sort of thing, as I now have an accountant file my taxes each year and I would highly recommend it, especially, if you are starting to invest but that sounds like a pretty good video idea, so if I get enough interest I may make that video :)
@@ConnorandAlan hi mate, Lets say I have $1100 profit from 50 trades (by investing $8900) I did for 2020 july-2021 June and I have not made a withdrawal to my bank for that gains out of my trading app and as per my statement from app my realized equity $10000 and unrealized equity is $10,040 (for unclosed trades). DO I need to declare my CGains of 1100 for my financial year income?
@@Reepix Legend
On Stake, where do I see how much I have earned in a day ? Also does it combine all your earning stocks into one figure ?
Immediately, as you open the app, you should be on the Dashboard page. The big number at the top of the page is the current value of all your holdings combined and the number under that is your appreciation/depreciation in value overall that day. Hope that helps! 😁
it was a helpful video for me, thanks
Great video! Really appreciate all the info!!
Thanks, glad it was helpful!
Can this information be applied to forex/ Cfd trading
Great question but unfortunately, I am not 100% sure :/ Something to think about is that potentially the way you conduct your trades may impact your tax treatment. For example, when buying shares, individuals who are considered to be holding shares as an investor are treated differently compared to those carrying on a business as a share trader. So there may be a similar separation for CFD traders. I would recommend speaking to a tax professional/financial advisor.
Isnt the US withheld 15% tax offset/deductible when you do your tax return?
Yes, it is! Sorry, I should have made that clearer in the video. As far as I am aware, it is a tax offset 😁
OMG that was exactly what I needed to know!
hahah awesome! I hope you found it valuable :)
when you say you get taxed when you sell do u mean when the money reachs your bank account or when it just on your balance in the app ( i use trading 212)
Hey Connor, Nice Video, Quick question I got the point for Capital Gains Tax and Dividend, but what about when I don't sell the stock or Dividend, I received I use it in buying the same stock again, mainly not getting the money in my bank account, So still I have to include that Capitals gain/profit;/dividend in my salary?
How about day trading tax?
Great question, William, and sorry for the delay! Generally speaking, you'd need to determine if you're a trader or an investor as this will determine your tax treatment. Take a look at this article for some further context: www.ato.gov.au/General/Capital-gains-tax/Shares,-units-and-similar-investments/Shareholding-as-investor-or-share-trading-as-business-/
Also congrats on 1k!!!!
Thank you!! Very exciting times and we literally could not have done it without your support :)
What if you buy and sell multiple times in the year? The same stock or other stocks like day trading or swing trading? Do we need to record each trade or just the total increase?
Brilliant video! very well explained and simplified. You have just earned yourself a new subscriber. I am currently looking for a new broker that deals in fractional shares. I have seen your review on Steak. My question is what is the customer support service like with Steak? Have you had any issues that needed support?
Wow! Thank you so much for the kind words, Dave and welcome to the channel! With regards to your question, as someone who pays close attention to detail, I have contacted Stake's customer support on quite a few occasions wanting to better understand how something works. Each time I contacted them, they would usually reply within 24 hrs and I have found their assistance to be sufficient in answering any questions I have.
Hey Lads!
If you were a dividend based investor, do you receive any tax discount for holding the shares for over a year or is it just the flat 15% withholding tax no matter what. (before AUS tax becomes involved). Thanks and keep up the awesome videos!
Great question! As far as I am aware, the CGT Discount only applies to capital gains which can only be realised once an asset is sold. So the dividend income you receive would not be classified as a capital gain but rather, it would be classified as income. As far as I am aware, there is no discount for dividend income even if you have held the asset which produces the dividend for longer than 12 months. With regards to the specifics of the 15% US withholding tax, it is probably best to consult a professional come tax time! Hope this helps :)
hey guys, thanks so much for these videos, i plan on following your guide and using the referral code for stake and getting started with vanguard ETF investing. i have a question about tax in australia - do i need to declare or change the way i do my yearly tax return once i start adding funds into stake and buying into ETF's? is the annual % "gain" from investing into VOO considered taxable income (or capital gain i guess?) and does it provide dividends? hope this makes sense i'm very new to all this, and thanks again!
Thank you so much for watching! With regards to your question, it is probably best you speak with a tax professional but in my situation, the only time my taxable income increases is if I receive a dividend or I sell shares for a profit (meaning I sell them for more than I bought them for). Hope this helps :)
@@ConnorandAlan thanks for the reply guys! i don't plan on selling or day trading or anything else, just depositing into Vanguard, so i'll check whether they pay dividends. thanks again!
@@no-solace5675 Our pleasure!
Am i able to sell a stock that has captial loss but will be enough to have the money that will tranfer back to my bank account to pay my taxes on the finaicail year? cause i dont think will have enogh cash on the side to pay?
Sorry for the delay in replying! While I can't give advice on your situation specifically, one could sell off a stock position at a loss and that would not only provide them with additional capital to go towards their tax bill but the realised loss could also offset their capital gains which could lower their tax bill. Hope that helps a little. But I would highly recommend you consult a tax accountant/financial advisor.
So we need to pay dividend tax twice? One in the US and in Australia? 😟
That is right :/ However, I would recommend speaking to your accountant for ways to minimise your tax obligations
So if you buy stock and hold for 1yr, wouldn't you get taxed on the purchase at EOFY to start with?
You can also place 25k into your super tax free to lower your taxable income..
Thanks for the content!
I would like to ask how do you include the currency conversion cost in your cost base for buying and selling stocks and fee for the W8 with Stake?
Really great question Valeriia! Unfortunately, when it comes to calculating your cost base, it can be quite complicated so I wouldn't feel comfortable offering advice. It would be best to speak to a tax professional. Sorry I couldn't be of much help :(
@@ConnorandAlan Thanks for responding Connor! Understandable. It is really tricky and annoying!
If you have experience please could you explain us how to consider promo-gift shares from Stake? Do you calculate full amount as a capital gain or just a profit after cost base(the price at the time you were given a share)?
Thanks so much for this informative content :)
Got a question tho as a Stake investor here, if you got profits from stocks and some of them were taken out and sitting on Buying power and not withdrawn to Aus bank, would that be taxed? Really curious about it.
Thanks :)
Thanks for commenting, Henry! The moment those assets (stocks in this case) were sold, a taxable event was triggered. So even though the cash hasn’t been withdrawn to your Australian bank account, you will need to declare those trades on your taxes 😁
Just to clarify, does that mean even though a 15% tax fee comes out when you receive a dividend, you still have to pay tax on the dividends come tax time in Australia ?
No, fortunately! When you pay that 15% withholding tax in the US, you should be able to claim a Foreign Income Tax Offset when filing your taxes here in Australia which is designed to avoid double taxation 😁
This is very informative. thanks for this video!
I want to ask, do I still need to pay tax for dividends even if I don't put it in my bank and leave it there on Stake? Thanks!
I’m so glad you found it informative! And generally speaking, yes, you will still need to include all dividend, even if they stay in your brokerage account, in your assessable income 😁
Hey guys, recently turned 18 and purchased some dividend stocks on stake. I received my first dividend and the withholding tax rate is at 41%. Any way I can reduce this?
Sorry for the delay! It is great to hear that you have started investing! hmmm, I haven't seen that before...
I initially thought it may be due to you not providing your TFN when setting up your account however from the sound of Stake's FAQs it doesn't seem as though this would impact the withholding :/ The only thing I can suggest is to contact Stake's customer support on ausupport@hellostake.com, assuming you haven't done so already. Sorry I couldn't be of more help!
Awesome! Very informative!
Glad you think so! Thanks for watching and commenting :)
Can you make more specific video on us stock and taxes for Australian and nz ppl
Q. Can Australians claim that 15% US withholding tax back on our income tax returns?
Great question! I am not 100% sure at this stage. However, I will ask my accountant when I submit my taxes this year!
Do I need to do anything if my investments are at a loss?
Thanks also. Can I use Stake to buy shares in my SMSF (Self Managed Super Fund)? Is applying for that trading account more difficult?
I believe so! Stake do offer a SMSF account type however I am not familiar with the sign up process. I would imagine it is more involved than a regular account haha
When we US sell shares we get US dollars back. We pay the taxes in AU after conversions but when we bring our US dollars back in our AU account, do we need to pay taxes of currency change gain/loss?
To clarify, I am not taxed based on the number of trades I've made, correct? i.e I can buy/sell stocks as many times as I want as long as I comply to the PDT rule.
Sorry for the delay in replying! But yes, as far as I am aware that is correct :)
Can i buy US stocks being an international student in australia?
Great question! Unfortunately, I am not exactly sure :/ Perhaps, someone else in the comments knows the answer?
Yes you can
I would like to ask if I manual put the dividend back to stock, does it consider CGT, thank you
Generally speaking, when a dividend is paid out it is to be counted as income and thus subject to one's individual tax rate, even if that dividend is then reinvested. Once the shares are eventually sold, any profits will be subject to CGT.
Remember, this is not financial advice and you should always consult a professional when dealing with your specific situation.
Dumb question alert! So basically, you dont get taxed as long as you dont sell, right? I'm all new to investing, I'd appreciate anyone who can clarify :)
There are no dumb questions, Charles! Generally speaking, yes. If we consider shares, you may need to add any dividends you receive to your assessable income but you will not have a capital gain/loss until you sell 😁
How does it apply if you buy shares multiple times of the same stock throughout the year? E.g. if i buy 50 shares in january then another 50 in February, and i sold say 60 shares january the following year, would that mean i get the 50% discount on 50 of those shares but pay the full rate on the other 10? Or would they make me wait until 1 year has passed since my latest purchase of a stock, period?
Great question and apologies for the delay in replying! As far as I am aware, it is how you described it first. You would get the discount on 50 of the 60 shares sold! But I would still recommend confirming with a professional :)
Heyy!! As an Australian citizen and Stake investor, this is great information thank you!
I do have a question about Stake,
I am still a minor and are investing underneath a parent’s name on stake. When I become legal, how would I transfer ownership to my name? Thanks for your help!!
Hey mate, I'm a bit confused. I was under the impression that CGT is not added directly to regular income
Eg. If I earn $30000 as salary, $1000 from dividend and $5000 capital gain (CG), then $31000 is divvied up on the tax scale, then 30% of CG is added on top of it (15% if I held on for more than a year). So, $2432 taxed on regular income + $1500 CGT (or $750 CGT discounted).
Thank you for voicing your confusion Reji because if you are confused, I am sure there will be others!
Considering they call it the Capital Gains TAX, I can understand why you were under the impression that is was separate from your regular taxable income however this is not the case.
The ATO put it this way on their website, "although it's referred to as capital gains tax (CGT), this is actually part of your income tax, not a separate tax. When you make a capital gain, it is added to your assessable income and may significantly increase the tax you need to pay."
Click here to view their CGT information page: www.ato.gov.au/general/capital-gains-tax/
Here is another video made by Conail, a financial advisor from What if Advice, which I believe explains CGT pretty well: ruclips.net/video/SO-vopDVHng/видео.html
Hope this helps :)
@@ConnorandAlan I finally figured it out. CGT is calculated (discount applied if eligible) and then the final amount is added to the individual's income. Thanks for a bit more clarity on the subject. I was under the impression that CGT figure was tax payable.
Thanks for the video! It was really helpful:) one thing I was confused is about dividend and tax calculation on stake. Is the dividend written in green colour total amount of dividend including taxes? For example, at 3:01, the given dividend was $13.21 and then $1.98 was paid for tax. Does that mean the actual amount I got is $13.21(A)-$1.98(B)? I was confused because Sharesight calculates the gross amount = A+ B, not A-B. Could you please clarify this? Thanks~!!
Sorry for the delay in replying but I am glad you found the video helpful, Jeeyun! With regards to the first part of your question, yes! The green amount is the full dividend in USD and the red amount is the 15% withholding tax. So in this example I was left with USD$11.23.
Hmm that is strange because on my end Sharesight have recorded the amounts correctly. Perhaps, you are looking at the dividends in AUD and that may be causing the confusion?
are dividends added to tax brackets before or after the american tax? (15%)
hi there do I need to pay taxes even I didnt withdraw cash from stake platform? no earnings yet though. thank you
Great question! Generally speaking, any gains realised through the sale of shares are subject to CGT and any dividends paid out are counted as assessable income, even if the funds are not withdrawn for the platform. Hope this makes sense!
Remember, this is not financial advice and you should always consult a professional when dealing with your specific situation.
thanks Allen, do we have something called CRT (Charitable remainder trust) in the USA here in Australia?
Great question but unfortunately I am not exactly sure :/ Maybe someone in the comments may have some information? Otherwise, you could try speaking with a qualified tax/finance professional 😁
How about smsf tax ? Do we pay 15% us tax + 15% aus tax?
Great question! But it is probably best you direct that one to a professional, sorry I couldn't be of much help :/
What if I am holding my shares and I don't sell anything???
Great question! Someone in this scenario would not have to pay Capital Gains Tax until the asset is sold however they may have to pay tax on any dividends they receive. This is not tax or financial advice and I would recommend you consult with a professional :)
What happens if you buy 100 Apple shares first, then buy another 200 Apple shares 6 months later, then you sell 150 Apple shares 12 months after the first 100 shares?
Great question! We had a similar question about a week ago and as far as I am aware, as long as the first lot of shares were sold after 12 months, you would received the discount for those and the other 50 shares that we only held for 6 months would not receive the discount :)
Hi, I'm a newbie with investing. With share sight, you said it's free with 10 holdings - can you explain what this means a bit further? Does this mean for example, 1 holding = VAS? 2 holdings = VAS and VGS? Thank you!
Of course! What you have written is exactly right. A holding is a type of asset (i.e. VAS, AAPL, TSLA or SNAP) and the restriction of 10 holdings does not restricted the number shares you may own of 1 specific company but rather the number of different companies you own. I hope that makes sense 😁
Do I pay any tax if Im just holding???
Great question! Someone in this scenario would not have to pay Capital Gains Tax until the asset is sold however they may have to pay tax on any dividends they receive. This is not tax or financial advice and I would recommend you consult with a professional :)
How and When do I pay tax to USA government from Australia ?
does anyone know how i can convert currency from USD to AUD for trades i've done in the US? I'm confused as to whether one is supposed to use the currency conversion rate at the time of trade (realisation of profit or loss) or whether i just use the present day conversion rate? or do i only do the conversion once its converted into australian dollars?
When are we going to be taxed?
Great question! And again, apologies for the delay! When you are taxed on investments (like shares) you will not have any tax come out automatically as you most likely do at your job. Instead, at the end of the financial year, your capital gains and dividend income will just be added to your taxable income and then the additional amount you owe in tax will then just be included when you file for your taxes :)
Hi i do trading through app
I am just wondering do i still pay tax if i dont withdraw in my Australian account (it is still in stake Acc)
I just did few selling (made capital loss) and earn divident
For 3 yrs
So if I sell my US shares the US government doesnt tax me anything? Only if its dividends? Then I just add the amount to my taxable Australian income?
Thanks for great content
Our pleasure! Thanks for commenting!
so im australian i get american stocks
i pay australian tax, then another 15 percent?
big help thank you !
You're very welcome! Thank you for commenting :)
Man, I signed up to stake and got an absolute DUD of a share that was barely worth $3. I thought GoPro was the lowest you could get, but apparently not. Looking forward to when they add the ASX though. AVZ to the moon🚀
Oh no! That's unfortunate :/ Yes, Stake recently updated their referral program to offer Nike, Dropbox, GoPro and a mystery stock. So are we! We are hoping to get our hands on the beta version of their ASX brokerage service and will be posting content about it so be sure to keep an eye out for that!
If I earn 10k profit by selling my shares and if I am unemployed, should I pay any tax? Highly appreciable if you reply to my question.
Thanks for commenting and sorry for the delay in replying! Hypothetically, if an Australian individual wasn't earning any other income but sold some shares for a profit of 10k, their assessable income would be 10k which is below the minimum taxable threshold and may not be required to pay tax. But this is not tax advice, just an example! I would highly recommend you speak with a Tax Professional if you do require advice :)
Thank you so much for your video very clear and easy to follow 🙌🏽
Awesome! I hope you found it useful :)
Hang on... I'm pretty sure without completing a W-8BEN form, you may wind up paying 30% of proceeds to the IRS upon sale of US stocks... If so, you should really make an adjustment to this video before people are blindsided by that
great vid ! very informative thanks, but a question! also using stake for US trading, so does the CGT discount also apply to international shares?
Not a problem my friend! Thank you for the comment!
I believe it does but it is best to consult with a tax professional :)
Tax rules for US is a little more than 15%..... no?????
Great question! Of course, for an individual US citizen filing their income taxes I believe they would have a progressive tax system just like we Australians. But this 15% withholding tax is for non-US citizens profiting off US based shares. This article may provide a little more context: www.tved.net.au/index.cfm?SimpleDisplay=PaperDisplay.cfm&PaperDisplay=www.tved.net.au/PublicPapers/February_2002,_Accountants_Education_Channel___Tax,_The_New_Protocol_to_Australia_USA_Double_Tax_Treaty.html
Great video! If I invest long term my self managed superfund and only takes out in 30+ years, what CGT % do I need to pay?
Is there a difference between investing with my super and with cash with the same scenario? (Investing long term - dollar cost averaging)
Great question, Anne, and judging from your question you are definitely moving in the right direction when it comes to finances!
There definitely is a difference with regards to tax when you compare investments outside and inside of super. Generally speaking, inside of super one would pay 15% in tax on contributions and gains whereas income outside of super is taxed up to 45% (excluding the medicare levy). On top of that, if one were to hold an investment for longer than 1 year outside of super they will get a 50% Capital Gains Tax (CGT) discount (meaning they will only be taxed on half of the gains) whereas inside of super they will get a 33.33% discount (meaning they will only be taxed on 2/3 of the gains).
I hope that makes sense, check out this video I made which explains what I have described above with an example: ruclips.net/video/4AVrwFjr9Ys/видео.html
why are australian investors so much more articulate and sophisticated when it comes to the actual technicals. Most american stock yts are crap lol
Hahaha this is such a great comment! Thank you for the kind words 🙏🏼😁
*oh you made a good investment GIVE ME MONEY*
I wish I could Bread Guy!
Ma man
👍🏽
Hey Connor! It's Loic here. I tried posting a comment but kept getting 'comment failed to post' as I believe it was too long. There appears to be a 400-500 character limit on youtube which I was not aware of so I stuck it in pastebin instead.
pastebin.com/92MJA5LN
Loic!! Thanks so much for commenting and subscribing to the channel and sorry for taking so long to reply to your comment. For some reason I completely missed it!
I read through your comment on pastebin and from what I understand, your reasoning checks out. But you know what, I think Interactive Brokers may have removed their inactivity fee?!? If this is the case, they may be one of the cheapest brokers I have ever seen!! Let me know if this is the case but regardless, I think I will probably open an account with them to try it out for myself!
How are you? It looks like this comment was sent over a year ago so how did you go opening your investment? Did you end up using IBKR?
@@ConnorandAlan Hey Connor! (or Alan? Don't know who checks the comments) It has indeed been over a year, took a while but thanks for taking the time to reply to my comment. I think your subscribers have doubled last I checked! I did indeed end up going with IBKR and yes they removed their monthly $10 inactivity fee as of July 2021 I think it was, which is great! The brokerage fee is even better than I thought as I was previously using a Fixed account (set by default) which charged $1USD (which was already very good) per trade but I found I could change to Tiered in my account settings and now it's charging me $0.35USD per trade which is even better.
The FX fee I've since discovered is actually negligible. I thought it was a min. of $2USD they charge you each time you want to convert currencies but this does not apply to trades. So for example if I specifically ask IBKR to convert $1000AUD to USD I believe I would be charged the $2 (haven't actually tested this so can't confirm), but if I have $1000AUD in my account and then buy some stock listed on the NASDAQ for $500USD it would automatically convert the necessary amount of AUD to USD to buy the stock and I am not charged the $2! (This I can confirm) For Fixed accounts you are not charged an FX fee but for Tiered it's 0.002%, so converting $1000 would cost you 2 cents which is basically nothing. That's why I said it's negligible. I honestly don't know why you would stick with a Fixed account type over Tiered, haven't seen anything where Fixed is better yet, although a Fixed account type is still way better than any other broker I've seen.
Their FX conversion rates basically mimic what you see on google, and this alone already makes IBKR so much better than other brokers in the long run. The only other broker I've seen do this is Charles Schwab. I remember I tried opening an account with them last year but ran into some issues and so was never able to test them myself but I've been happy with IBKR.
All in all I'm paying about $0.50AUD in commissions per trade.
The biggest downside I would say of IBKR is their horrendous web UI and just how slow everything feels to load. They have something called TWS (Trader Workstation) which seems more responsive and better suited for day traders but man the UI looks like something straight from the early 2000's. I don't day trade so it's not too much of a problem for me and I just put up with the sluggishness of the web portal.
Let me know of any other thoughts you may have and how you go if you do open up an IBKR account!
A suggestion: please stop zooming in and out. It's very distracting, detracts from your message.
Cheers.
Thanks for the feedback! I will keep this in mind next time I am editing 😊
tax the rich they say lmaooo
Thanks for commenting!