If you are trading on the forex market and if you happen to make money during the financial year (1st July of the previous year to 30th June of the current year) do you have to pay income tax on the money earned?
The reason why this question is asked is due to the fact that people liken trading to gambling. We do not know the future and placing a trade is similar to making a bet.
While I am not a professional tax accountant or tax advisor profits derived from forex trading would be treated in the same manner as trading other financial instruments such as stocks, Contracts-For-Difference, or futures. Regardless of whether you actually held the physical contract, or instrument.
Therefore, if you are trading according to a predefined set of rules and are engaging in the enterprise to make a profit and you do make a profit you will need to keep some money aside to pay the tax bill at the end of the year.
Once the ATO receives your first income tax return detailing the profits you have made you may be required to remit income tax on a quarterly basis. This reduces the risk of being able to pay your tax bill at the end of the financial year.
To learn more about calculating your income tax you might want to check our previous post on completing your income tax return.