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Is Forex Trading Taxable in Australia

Foreign exchange trading is a thriving industry in Australia. The sector is well-regulated by local authorities, ensuring high levels of safety and customer protection.

  

Choose your quick section of our is Forex Trading Taxable in Australia below

A quick Overview of our is Forex Trading Taxable in Australia Review:

 

Australian investors have a choice from a large variety of instruments to trade, including foreign exchange, commodities, and leveraged derivatives.

 

Forex legislation in Australia

 

Forex brokers who wish to offer their services to local traders must operate with in strict compliance of various regulatory policies which aims to protect customers and minimize the chance of possible scams and fraudulent activities.  All brokers must hold valid licenses from the Australian regulator, ASIC before they can offer their services to Australian customers. Licensed brokerage firms must also set up a representative office in the Australia. This will not only increase accountability but also instil higher trader confidence. All licensed Forex Brokers will be required to undergo regular audits.   Brokerage firms are required to store their clients’ money in segregated accounts and  be able to show proof of this segregation to the regulatory body if and when requested. Forex Brokers who wish to apply for an Australian license must have operating capital of at least AU$1 million.

 

Financial regulators in Australia

 

Forex Brokers who offer their services  to Australian customers will be subjected to the rigorous oversight of the Australian Securities and Investments Commission (ASIC). ASIC operates under the provisions of the Australian Securities and Investments Commission Act of 2001.  ASIC governs the sectors of financial services, including derivatives, securities, and insurance. ASIC offers an online register find all brokerage firms which fall under its oversight. ASIC also deals with the resolution of disputes between customers and brokers.   Australia’s second major regulatory body is the Australian Prudential Regulation Authority (APRA) which is tasked with the regulation of banking institutions, credit unions, and insurance companies.

 

Forex payment methods in Australia

 

Australian Traders who wish to open a live account will need to meet minimum capital requirements.  Available payment methods include credit or debit cards by Visa or Mastercard. Many Australian traders also make use of cards by UnionPay.  Another viable payment option is e-wallets like Neteller or Skrill.

 

Taxation on Forex trading in Australia

 

Forex Trading Tax in Australia will apply to a person who is not a resident of the country but does have an income source in Australia. Therefore, an investor who trades on the foreign exchange market through the use of an Australian broker, will have to pay tax on the profits made.   A Maximum of 60% of an investors trades can be considered as long-term capital gains/losses.

 

When trading forex, futures or options, investors will be taxed at the following rates:   23% rate (calculated as 60% long-term x 15% max rate + 40% short-term rate x max income tax rate).

However, all taxes will be applicable if a forex trader is profitable within the income tax assessment year.

 

Capital gains Tax in Australia

 

Capital Gains Tax was introduced in Australia in 1985 and applies to any asset acquired since this time unless explicitly exempted.  According to the Australian Tax Office, a capital gain or capital loss on an asset refers to the difference between what the asset cost to acquire and what is received when the asset is disposed of.  Tax will be paid on capital gains, which will form part of a person’s income tax and is not considered a separate tax – even though it’s referred to as CGT.  If an asset is held for at least a full one-year period,  any gain is first discounted by 50 per cent for individual taxpayers or by 33.3 per cent for superannuation funds.

 

Income tax in Australia

 

The 2021 financial year for tax purposes, will start on the 1st July and end on 30th of June 2022.  In 2018 a number of adjustments were announced to the personal tax rates in Australia which took effect in the tax years from 1 July 2018 through to 1 July 2024.

 

Tax scale 2022-22

 

Taxable Income Tax On This Income
$0 to $18,200  Nil
 $18,201 to $45,000  19c for each $1 over $18,200
 $45,001 to $120,000  $5,092 plus 32.5c for each $1 over $45,000
 $120,001 to $180,000  $29,467 plus 37c for each $1 over $120,000
 $180,001 and over  $51,667 plus 45c for each $1 over $180,000

 

Regulated Forex Brokers who accept Australian Traders

 

IG

 

IG Group was founded in 1974 and is regulated by the Financial Conduct Authority (FCA) in the U.K. and the Australian Securities and Investment Commission (ASIC) in Australia.

 

Pros and Cons

 

Pros Cons
Used by 178,000+ traders Inactivity Fee
Established in 1974 Limited range of instruments
Regulated by Financial Conduct Authority and ASIC
Min. deposit from $250

 

The country of a traders residency will determine which account type they can open. In most countries, they will only be able to trade forex, CFDs and options.  Traders can choose between two trading platforms, IG’s proprietary trading platform or MetaTrader 4.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account PayPal
Low min deposit Payoneer
Guaranteed stop loss

 

Customer Service is available 24/7 via Phone, Live Chat and Email.

 

Saxo Bank

 

Saxo is a globally regulated, multi-asset class broker which offers traders the option to trade on more than 40,000 instruments covering Forex, CFDs, Stocks, Options, ETFs, Commodities, Futures, Bonds and Mutual Funds from a single account across multiple platforms including their own – SaxoTraderGO and professional-grade SaxoTraderPRO.

 

Pros and Cons

 

Pros Cons
Segregates client funds Doesn’t allow hedging
Established in 2012 Limited range of instruments
Regulated by Financial Conduct Authority Not ASIC Regulated
Min. deposit from $6,500

 

The Saxo Group is regulated in 15 jurisdictions including authorisation from the UK Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC), the Financial Services Agency of Japan (FSA) and many more.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Offers STP Mini account Bank Transfer
Low min deposit Standard account Payoneer
ECN account

 

Customer support is available in nearly 30 different languages via phone, email and an FAQ section.

 

CMC Markets

 

CMC Markets is a multi-asset class spread betting and CFD broker which is regulated by the UK’s Financial Conduct Authority (FCA). Clients have the ability to trade on more than 9,000+ trading instruments covering Indices, Forex, Cryptocurrencies, Commodities, Shares and Treasuries, all on the MetaTrader 4 platform or the broker’s own proprietary, web-based Next Generation platform.

 

Pros and Cons

 

Pros Cons
Extensive range of offerings Does not accept U.S. clients
Regulated by FCA (U.K.) Differences between Next Generation and MT4
Emphasis on education & customer service High CFD spreads for certain indices
Research amenities are industry leading No back-testing or automated trading capabilities

 

CMC Markets offers a wide range of instruments to trade on covering all major asset classes such as 300+ Forex instruments, 60+ Indices, 15 Cryptocurrencies, 90+ Commodities, 30+ Treasuries and 9,000+ Shares and ETFs.

 

Trading benefits

 

Trading Features Accounts Offered Funding Methods
No Deposit Bonus CMC Markets CFD Account Wire Transfer
Stop Loss CMC Corporate Account Credit Card
CMC Stockbroking Account e-Wallets
CMC Spread Betting Account
CMC Markets Professional Account

 

Customer support is available 24/5 via Live Chat, Telephone, and Email.

 

City Index

 

City Index is a world leader in spread betting, FX and CFD Trading, regulated by the Financial Conduct Authority (FCA).  The City Index trading platform offers traders a range of customisation options, which includes 16 chart types with 65+ indicators specifically designed for investors to perform technical analysis.

 

Pros and Cons

 

Pros Cons
Used by 140,000+ traders Doesn’t allow scalping
Established in 1983 Inactivity Fee
Regulated by Financial Conduct Authority, ASIC and MAS Limited range of instruments
Min. deposit from $25

 

To open a live trading account, traders will need a minimum deposit of at least $25.  City Index offers over 12,500 different instruments to trade, including over 84 currency pairs on the ever-popular MetaTrader4 trading platform.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows hedging Demo account Credit cards
Offers STP Micro account Bank Transfer
Low min deposit Mini account Payoneer
Guaranteed stop loss Standard account
Managed account

 

Multilingual Customer support is available by email, phone, or live chat.

 

eToro

 

eToro is an online broker which was founded in 2006 and offers CFDs and Social Trading, with a head office based in Cyprus, UK.  eToro is supervised by the Financial Conduct Authority (FCA), Cyprus Securities and Exchange Commission (CySEC) regulatory bodies and has been in operation for over 14 years.

 

Pros and Cons

 

Pros Cons
Used by 6,000,000+ traders Doesn’t allow scalping
Established in 2006 Inactivity Fee
Regulated by Financial Conduct Authority, CySEC, ASIC Limited range of instruments
Min. deposit from $200

 

eToro offers traders two ways to trade: CFDs, Social Trading and eToro traders will need to make a minimum deposit of $200 and the platform can accommodate various levels of traders from beginner to expert.  Traders can trade in a wide variety of over 100 instruments and over 50 currency pairs on eToro’s user-friendly custom trading platform which is available as a browser-based web application. eToro also offers traders mobile apps for Android and iOS, making it easier to keep an eye on and execute trades.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Offers STP Demo account Credit cards
Low min deposit Micro account Bank Transfer
Mini account PayPal
Standard account Skrill
Islamic account Payoneer
Neteller

 

eToro supports a wide range of languages including English, German, Spanish, French, and Italian.  24/6 customer support is available via telephone and support ticket.

 

FP Markets

 

FP Markets is a global, online broker regulated by the Australian ASIC and the Cypriot CySEC which was founded in 2005 and offer Forex trading and has a head office situated in Australia. When starting off with FP Markets traders will need to make a minimum deposit of $100 and a demo account is on offer with a wide variety of instruments and currency pairs on offer.

 

Over 100 instruments and over 60 currency pairs in total is on offer, on the popular MT4 forex trading platform.  FP Markets also offers traders mobile apps for Android and iOS.

 

Pros and Cons

 

Pros Cons
Low Forex Fees High Stock CFD fees
Easy Account Opening Limited Product Portfolio
Quick Deposit and Withdrawal Outdated Platform

 

Trading benefits

 

Trading Benefits Accounts Offered Funding Methods
Allows scalping Mini Bank Transfer
Allows hedging Standard Credit/Debit
Offers STP ECN Electronic Wallets
Low min deposit STP
Offers Negative Balance Protection Managed

 

All accounts support a wide range of languages including English, Spanish, Portuguese, Romanian, Bulgarian, Arabic, Russian, French, Italian, Greek, Philippines, Latvian, Polish, Indonesian, Thai, Malay, German, Vietnamese.

 

Customer Service is available via email, phone and live chat.

 

XM Group

 

XM Group (XM) is a group of regulated online brokers regulated by the Cyprus Securities and Exchange Commission.

 

Pros and Cons

 

Pros Cons
Low stock CFD and withdrawal fees Limited product portfolio
Easy and fast account opening Average forex and stock index CFD fees
Great educational tools No investor protection for non-EU clients

 

XM offers traders more than 1000 financial instruments to trade on both the MT4 and MT5 platforms, including Forex Trading, Stocks CFDs, Commodities CFDs, Equity Indices CFDs, Precious Metals CFDs and Energies CFDsForex trading is available on over 55 pairs, including the major USD, GBP, EUR and JPY pairs.  Traders must take note that XM does not offer binary options or futures.

 

Trading benefits

 

Trading Features Accounts Offered Funding Methods
Negative Balance Protection Micro Wire Transfer
Low Spreads Standard Credit/Debit
Low Commission XM Zero Neteller
Hedging Allowed UnionPay
Scalping Allowed WebMoney
Qiwi

 

Customer Service is available via live chat, Phone and email support.

 

Pepperstone

 

Pepperstone was founded in 2010 and is regulated by the Australian Securities and Investments Commission (ASIC), as well as the UK’s Financial Conduct Authority (FCA).

 

Pros and Cons

 

Pros Cons
Segregates client funds Limited range of instruments
Established in 2010
Min. deposit from $200

 

Trading platforms on offer include MetaTrader 4MetaTrader 5 and cTrader. All three FX trading platforms come with a free demo account which will allow traders to test out the forex broker and platform for 30 days.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account PayPal
Low min deposit MAM/PAMM account Skrill
Offers Negative Balance Protection Islamic account Payoneer
Neteller

 

Pepperstone offers 24/5 multiple language support via email, phone and live chat.

 

FXCM

 

Forex Capital Markets Limited or FXCM is a Spread Betting, CFD and Forex trading broker, authorised and regulated by the UK Financial Conduct Authority under the Forex Capital Markets Limited and is part of the Leucadia Company, which offers users the ability to trade on Forex, Forex Baskets, Indices, Commodities and Crypto on its own proprietary Trading Station platform for Desktop, Web and Mobile, as well as on MetaTrader 4, NinaTrader and ZuluTrade.

 

Pros and Cons

 

Pros Cons
Segregates client funds Limited range of instruments
Established in 1999
Regulated by Financial Conduct Authority
Min. deposit from $1

 

FXCM offers traders 4 main types of trading accounts to choose from, including  Spread Betting, CFD Trading, Active Trader and Professional Clients. A Free Demo account is also made available.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account Payoneer
Low min deposit Islamic account

 

Customer Support is available via Live Chat, Phone, Email and SMS.

 

AvaTrade

 

AvaTrade is an online broker which was founded in 2006 and offers Forex, CFDs, Spread Betting and Social Trading and is a global broker with their head office situated in The British Virgin Islands. AvaTrade is regulated in Europe, the British Virgin Islands, Australia, Japan, and South Africa by ASIC, CySEC and FCA.

 

Pros and Cons

 

Pros Cons
Used by 200,000+ traders Doesn’t offer VPS
Established in 2006 Not FCA Regulated
Regulated by Central Bank of Ireland, ASIC, IIROC, FSA, FSB, UAE and BVI
Min. deposit from $100

 

For those who are looking to start out with AvaTrade will need a minimum deposit of $250 and a demo account is available for those who want to get acquaint with the popular MT4 forex trading platform.  AvaTrade also offer mobile apps for Android and iOS.

 

Trading benefits

 

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Micro account Bank Transfer
Low min deposit Mini account PayPal
Standard account Skrill
Islamic account Payoneer
Neteller

 

Customer support is available by email, phone, or live chat.

 

  

 

Conclusion

 

Australia has become a top destination for Forex Trading.  The country not only boasts an excellent selection of Forex Brokers but is transparent when it comes to regulation and tax.

Author Details

Louis Schoeman

Louis Schoeman

Featured Forex and Stocks writer

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