Money, Australian-style

1 Personal income tax

Personal income tax calculation in Australia is simple and automated. Except it’s not completely automated, especially for capital assets. For example, I invested a lot in equities this year. Fooled by the fact that some of my shares showed up automatically in my tax return, I thought they all would. No. And some of the ones that did show up did so in a way that wasn’t helpful. Instead of identifying the equity by name, a mysterious 8-digit number appears in the tax record, which doesn’t seem to correspond to anything in my equity ownership records. So, I end up doing forensic accounting on myself to reverse-engineer what the tax office thinks I did, versus what my stockbroker claims, and these look worryingly different. This needs to be tidier.

Sharesight promises to automate this tedious task as a feature. UPDATE: So far it has saved me many hours of life. Assuming that their calculations are in fact correct, adn the tax collectors are not coming to my door with cudgels, this is a good thing.

I am impressed, even at the astonishingly poor exchange rate where the subscription is AUD 25/month, i.e. about 200% of the US price. It integrates well with Interactive Brokers. Here is a referral link. Tell ’em I sent you and get 10% off, plus send me a USD 10 kickback.

Other tricks:

• Neat Google Sheet from someone on Reddit (ultimately less useful than Sharesight, but free and more flexible if you have the time to set it up and maintain it).
• Presumably other things? I have not yet tried them.

2 Real estate

Australia is deeply invested in policies to perpetually pump up real estate speculation, which is a depressing drag on the profound potential of this country, in my opinion, and a tax upon wonder. We could build anything here, make anything, but instead we sell houses to each other, and vie for a slice of the passive income that we shave off the active economy, playing the intergenerational zero-sum game.

So long as I live here, a speculative real-estate economy will shape everything around me, so I must engage with it and, I suppose, find my own bit of peace at the expense of the wider economy. Currently, I am trying to minimize my exposure to the entire bubble via cohousing, which is a relatively good harm reduction strategy for my temperament. The whole thing is still sad, though.

3 Equities

Trading in equities in Australia?

I am not super bullish on the Australian economy in general, so I would like to have a lot of my investments in international equities. The firm that seemed to offer me the best balance of diversity and price was Interactive Brokers a.k.a. IBKR (referral link). I recommend them based on my experience so far. That said, I am not a financial advisor, this is not financial advice, do your own research.

IBKR’s vibe is “rough edges but gets the job done affordably”, which is more or less what I want in an investment platform. There are too many complicated things going on for any platform to be smooth. They support sophisticated automated algorithmic trading, have lots of APIs, exposure to lots of markets, automated forex and lots of other smooth stuff. None of it is obvious, but the user manual is good, so I can figure it out.

Previously I used HSBC Trading, which was fine but without much diversity of international equities, and with occasional weird things like breaking my order into two parts and charging me $25 for each, but one of the parts was an order for one single share. That is the kind of rude behaviour a decent algorithm would have avoided, or a decently liquid market. IBKR is much better in this regard, probably on both counts.

4 Cryptocurrency

We can own cryptocurrency in Australia. It counts as a capital asset, so we pay capital gains tax on it.

It is inconvenient to purchase cryptocurrency in Australia on internationally popular exchanges due to some weird regulation I have not had time to understand. Other more-widely-recognised exchanges such as Binance do not work well here. I suspect there is extra compliance overhead for the exchanges so many do not bother.

Also to look out for: Some institutions that handle cryptocurrencies in Australia seem to handle only cryptocurrencies, and will not exchange them for any other asset classes other than AUD. For example, Revolut in Australia will let me “buy” cryptocurrencies, but not transfer them to other exchanges or swap them for anything but AUD, so it is purely a speculative instrument, not a medium of exchange.

Further, institutions that handle both AUD and cryptocurrencies in Australia do not seem to offer fancy derivatives or algorithmic leveraged instruments, etc. There does not seem to be anything practical stopping us from using a foreign exchange for such trades, transferring the currency there, and then trading in it, but we should check with an accountant about that. I bet the bookkeeping overhead is savage. I suspect that, at best, such trades incur a tax event and associated paperwork, so we would have to believe it was worth spending hours on compliance to do it. Or maybe it’s worse than that and this is some kind of financial crime? No idea. Proceed at our own risk, ideally with a qualified financial adviser and/or accountant.

Exchanges that claim to be AUSTRAC-registered:

• CoinSpot
• Swyftx
• OKX

Notably, these all seem to be Australian companies, which is probably a consequence of the regulatory overhead for foreign exchanges. Corollary: these aren’t as liquid as foreign exchanges, they have wide spreads and low competition, and they tend towards high fees and poor prices.

That said, I’m not a day trader, and I’m not doing anything fancy with derivatives or leverage. I can live with the inconvenience and fees for now, and at least get some exposure to cryptocurrency without worrying too much about compliance, so this seems acceptable for me.

5 Superannuation

See retirement in Australia.

6 Invoicing and tax, etc. for freelancers

If I’m a freelance contractor, then I’m technically a “sole trader”, which is still a business under Australian law and means I need to handle my own tax and compliance—especially Business Activity Statements (BAS).

What software can do this for me?

Saasu and Xero work out of the box for the Australian tax and compliance environment. Xero is too expensive for a sole trader and crowded with stupid features that small businesses use, but sole traders do not. Saasu is affordable but has a ugly interface (which I do not mind) except worrying signs of bitrot, such as not supporting that many banks, and form fields that don’t really make sense, probably because they are worse versions of the small-business feature explosions in Xero.

Perhaps Rounded is the goods? It supports the Australian tax environment, is affordable, and seems to be designed for freelancers and sole traders. It also supports banks I actually use (e.g. Wise) and has a nice interface.