Trending December 2023 # France Sends ‘Apple Tax’ Demands; Sparks New Trade War Fears # Suggested January 2024 # Top 21 Popular

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France has begun asking US tech giants for what has been labelled an ‘Apple tax’ – a specific tax on tech giants which the country considers tax avoiders. It has been hoped the country would agree to wait for a global agreement on the tax treatment of large tech companies, but France has now decided to proceed unilaterally.

The move promoted a threat of retaliation from Washington, leading to fears that it could provoke a trade war between the two countries …

Background

President Macron last year accused Apple and others of having ‘permanent tax haven status‘ in Europe. The country said it would tackle this by imposing a 3% tax on the so-called GAFA companies: Google, Apple, Facebook, and Amazon.

The reference to ‘tax haven status’ relates to practices used by Apple and others to funnel profits on European sales through Ireland, and then to claim large deductions for R&D costs incurred in the US […]

The net result is that tech giants can earn substantial sales revenues within countries like France while claiming to make very low profits locally. Since taxes are normally assessed on profits, that means they pay little or no tax in the countries where sales are made.

France wants to stop that by imposing a 3% tax on revenue. As Apple’s margins are typically around 37%, that would be equivalent to around an 8% tax on profits — still extremely low by normal corporation tax standards, but more than the country gets now.

There have been various proposals for international agreements, designed to ensure consistent tax treatment across countries. First, the European Union proposed a unified approach across Europe. That was expanded into a broader G20 proposal, across 47 countries. Finally, the Organisation for Economic Cooperation and Development (OECD) said that it would agree global rules which would apply to 137 countries.

Apple CEO Tim Cook backed the OECD approach, and work began on developing these rules this earlier in the year.

France sends ‘Apple Tax’ demands

Although France had initially indicated that it would be happy to wait for an international agreement, that changed when the coronavirus hit – with the financial crisis that resulted. France then said it would go ahead by the end of the year with or without an OECD deal.

The Financial Times reports that France has now sent tax demands to US tech giants. Apple is not specifically named, but it has been included in the proposals in the past, hence the nickname for the tax.

The Trump administration broke off talks with the OECD in June, likely leading to the French decision.

Paris’ demand to collect the tax represents the end of a truce with Washington. The two sides agreed in January to allow more time for talks on a multilateral fiscal framework overseen by the OECD, the Paris-based organization of rich countries, to take place during the year. As part of this break, France has agreed to temporarily stop collecting its digital tax.

However, the United States suspended talks with OECD countries in June. No solution is expected before the middle of next year […]

“We can’t wait any longer and tech companies are the big winners from the pandemic,” said a French official, adding that the European plan was “a lever” in the ongoing negotiations. “Their turnover is booming and they did not pay fair taxes even before the pandemic.”

A trade war now seems in the offing.

The office of the U.S. Trade Representative is now expected to impose a 25 percent tariff on $1.3 billion in French handbags and makeup, having initially threatened to strike champagne and cheeses with tariffs.

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Direct Tax Vs Indirect Tax

All About the Direct Tax vs Indirect Tax

Direct taxes, such as income tax, are paid directly by the person or company obligated to pay them. Indirect taxes are levied by the government and collected by an intermediary from the final consumer who bears the ultimate burden, for example, when buying goods or services.

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Direct Tax vs Indirect Tax

As they say, nothing is certain except death and taxes. Since we would like to focus on the more cheerful of these two options, let’s talk of taxation.

Taxes come in various avatars. They include sales tax, income tax, service tax, corporate tax, and many others. There are so many taxes that an average person often doesn’t even know he/she is paying for one.

The 2023 Union Budget is just around the corner, and like all years, there’s a lot of noise regarding taxes. Well, taxes don’t merely mean your income tax. While income tax is an example of direct tax, we don’t see indirect taxes.

The most fundamental direct and indirect tax classification is based on who collects them from the taxpayer.

Here’s how the two Direct tax vs Indirect tax differ.

Direct Tax vs Indirect Tax Infographics

Direct Taxes

It may include income from salary, house property, professional or business income, capital gains, and income from other sources, like the savings account or recurring deposit interests. The tax liability depends on the gender and residential status of a person subject to tax.

Indian companies must pay taxes on their earned income, both within the country and overseas, as mandated by law. In contrast, in the case of non-resident companies, the tax must be paid on the money earned in India.

House owners have to pay property tax that is applied according to the rules in the state. Lastly, the tax has to be paid on gifts that exceed ₹50,000 per annum.

The responsibility to declare income for the purpose of calculating the direct tax liability is on the individual. Non-payment or evasion could lead to heavy penalties.

Indirect Taxes

Indirect taxes can result in an increase in the total amount payable for certain products or services. The tax on a product may be shown separately from the product’s price or included in the price, such as the service tax on food bills being displayed separately, while the tax on petrol is included in the product’s price.

There are various forms of indirect tax, including customs duty on imported and exported goods, excise duty on goods and services produced domestically, service tax on services, value-added tax (VAT) applied at each stage of sale, and securities transaction tax on stock exchange transactions. These taxes are indirect because they can be passed on to another party. They are first levied at the manufacturer level and eventually borne by the final consumer.

Distribution – Direct Tax vs Indirect Tax

The gist of direct and indirect tax distribution lies in the shifting. A tax that can’t be shifted is direct, and the one which can be shifted is indirect. While the conventional distinction between a direct and indirect tax is logical enough, it’s very difficult to apply in practice. It calls for a fair knowledge of people’s behavior on indirect tax payments.

You can’t categorize it as indirect or direct unless you know whether the tax has shifted from an immediate payer to someone else. Difficulties may arise when the tax is partly shifted and partly borne by the individual on it is imposed.

Does it mean that a tax can be partly indirect or direct? Surely not. It’s better to put it this way that a possibility of shifting to any degree may be regarded as a condition for indirect tax. On the other hand, the absence of shifting may be considered a direct tax.

Economic experts differentiate between direct and indirect taxes based on the point of assessment. Indirect taxes are criticized for being regressive as they are collected regardless of financial position. They impact lower-income families more, especially when applied to essentials like medicine or food, as they are based on spending rather than income.

Examples of Key Direct Taxes Income Tax

Every so often, the working population of a country jointly celebrates the freedom, power, and liberty that come with being rewarded for a job well done. The gut-twisting excitement and warmth of achievement usually come at different times, via different channels, for different sections of society. But all categories of earners share two things in common: the feeling of success and achievement and the slight tinge of sadness when they realize that the amount they earned isn’t what they expected due to the income tax they must pay.

Individuals pay income tax based on stable income during a specific financial year. According to the Income Tax Act, “individuals” include HUFs, trusts, cooperative societies, and all artificial judicial persons. Taxable income means the total earned income minus all applicable exemptions and deductions. Income tax is payable when the net income crosses the minimum taxable limit, and it is paid according to the differing rates announced in the Union Budget for every slab in a financial year.

Corporation Tax

This tax is paid by businesses and companies operating within the country, on the income earned from all its operations at home and abroad, during a particular financial year. The tax rates vary depending on whether the company is incorporated in India or elsewhere.

Wealth Tax

Wealth tax is levied on individuals, HUFs, and companies, on the value of assets owned in a particular financial year and on the valuation date. It’s taxed at 1% of the assessee’s net wealth, over ₹30 lakhs. Here, net wealth includes unproductive assets like cash in hand over ₹50,000. Bullion or gold jewelry, cars, yachts, aircraft, boats, or urban land are not let out and are subject to income tax. The wealth tax doesn’t include productive assets like bonds, stocks, commercial property, mutual funds, fixed deposits, etc.

Tax on Capital Gains

Profits earned from the sale of property fall under capital gains tax. Property means precious metals, residential buildings, bonds, stocks, etc. The tax authorities charge capital gains tax at two different rates, depending on how long a taxpayer owned a property, i.e., long-term and short-term capital gains. Deciding period of ownership greatly varies among various classes of property.

Examples of Key Indirect Taxes Sales Tax

This tax is levied on the sale of movable goods. It’s collected by the Union government, in case of inter-state sales i.e. Central Sales Tax (CST), or by state governments for all intra-state sales i.e. Value Added Tax (VAT). The tax rates vary depending on the type of product.

Service Tax

This tax is a part of the Central Excise in India. The government taxes services provided within the country, excluding Jammu and Kashmir. The Central Board of Excise Customs (CBEC) collects the service tax. The government levies excise duty as an indirect tax on specific services, referred to as “taxable services”. Over the past several years, the service tax has expanded to include new services. A list of negative services has also been recently introduced.

The object behind imposing service tax is to lessen the degree of taxation on both manufacturing and trading units, sans forcing the government to compromise on revenue. To levy service tax, the value of a taxable service must be the gross amount charged by a service provider for services rendered.

Excise Duty

It applies to manufacturing goods sold in India. The Union government directly collects the excise duty from the manufacturer once the goods are produced. The manufacturer includes the excise duty and the cost of the goods when selling to the buyer and passes it on as a bundled amount.

VAT

The government imposes a value-added tax (VAT) as a multi-point tax on every stage of sale, based on the value added to a particular product. VAT is collected at the manufacturer/resale stage and contemplates the tax rebate on purchases and inputs.

Highlights of Direct Tax

Direct tax helps to reduce disparities in the wealth and income of people.

Economical because the collection cost is very low for the government.

Some extent of economic and social justice is achieved because the direct tax is based on the ability to pay.

A direct tax is often considered a progressive tax because of the ability to pay. The direct tax rates of progressive taxes increase with a rise in income and decrease with a fall in income.

Highlights of Indirect Tax

Indirect taxes are easily collected as they are already incorporated into the price of the commodity.

The coverage of indirect tax is extensive as every consumer is taxed through the price of the commodity.

The consumption of harmful commodities, such as cigarettes, alcohol, etc., can be discouraged, thereby serving a social purpose through the imposition of indirect taxes.

Why are Taxes Necessary?

A government needs resources for running the administration of a country. Taxes have been levied ever since public administration came into being with the rule of kings. It’s a system to collect and distribute the surplus from the rich to the poor. A country’s development and the provision of various civic amenities require taxes. They are often the rider for a country’s growth. The administration’s effectiveness and efficiency determine a country’s progress rather than the volume of taxes collected from its citizens and business enterprises. Many countries levy many taxes but spend the money on populist schemes instead for the real welfare of their people.

Conclusion – Direct Tax vs Indirect Tax

Both Direct taxes vs Indirect tax has their own set of purpose. Direct and indirect tax differences are equitable because they are levied on individuals according to their ability to pay. They are also economical because of the lower collection cost. However, the direct tax doesn’t cover all sections of society.

On the other hand, direct and indirect tax differences are easy to realize because they are comprised of the price of products and services and have better coverage of society. The good thing is that the tax rate is high for harmful products to dissuade people from using them.

Government policies change with time and affect a country’s taxation system. Tax structures guide public welfare demands and the need to foster growth. Authorities, at the same time, must ensure that taxes serve their intended purpose.

Smart Business Tax Preparation Tips

Preparing for tax season can save you time, money and frustration.

Whether you file your own business taxes or use a tax professional, being organized and prepared is essential to getting the best tax result for your business.

To get ready for tax season, you should keep business and personal finances separate, organize your records throughout the year, stay updated on the latest federal and state tax changes, and allow yourself plenty of time to file.

This article is for small business owners who want to be prepared for tax season.

Business tax filing deadlines can catch busy entrepreneurs and small business owners by surprise. Advance planning is crucial for staying ready and prepared as tax season approaches. We’ll explore tax preparation best practices that will keep you organized all year long so you can file accurate tax returns without any financial surprises for your company.

When is tax season?

Tax season is the post-tax-year time individuals and businesses use to prepare their tax returns without incurring late-filing penalties. However, for businesses, tax season is broader and includes the following obligations:

Traditional tax season. Tax season is traditionally the time between the end of January — when most people receive tax information for the prior year — and April 15, when individual tax returns are generally due. However, tax season for businesses depends on the organization type, business tax year, and whether the business files for a filing extension.

Quarterly taxes. All but the smallest businesses must file or pay some form of tax more often than once per year. If you’re required to pay quarterly estimated taxes, you have four due dates throughout the year. Quarterly estimated tax payments are due on April 15, June 15, September 15 and January 15 or on the next business day following a weekend day.

Payroll taxes. If you have employees, you must also file federal, state and local payroll taxes throughout the year.

Although the time when most annual income tax returns are prepared and filed is referred to as tax season, business owners should plan and organize to meet their tax obligations all year long.

Tip

If you need help managing payroll taxes, consider using one of the best payroll services that can handle tax compliance, payroll processing and more.

Tax season preparation tips

Whether you’re preparing to file last year’s business tax return or want to plan strategically for the current year, here are tax preparation best practices.

1. Organize your tax paperwork.

The best way to ensure your tax paperwork is organized is to keep excellent records all year. That way, after the end of the year, you’ll just have to gather the applicable tax documents that arrive in the mail or become available online.

Marc Scott, CPA at California-based M. Scott and Company, said planning heats up in January when companies begin sending out and receiving essential tax documents.

“There’s a lot of tax reporting that goes on in January, so you’re going to be receiving a lot of documentation,” Scott said. “For most businesses, it makes sense to have the books ready around a similar timeframe.”

If you have a small organization, getting a head start is crucial to avoid a last-minute rush and allow time in case your tax professional has additional questions and information requests.

What should I bring my tax preparer?

If you hire a CPA or other tax professional to prepare your business tax returns, they’ll need some key documents:

Proof of identity. As of 2023, tax preparers are required to ask for proof of your identity.

Business tax ID. You also must provide your business tax ID, which may be your Social Security number or your Employer Identification Number.

Financial records. The tax preparer also needs your business financial records for the year. This includes income from gross receipts from sales or services, sales records, returns, business bank account interest, and other income. It also includes the cost of goods sold (such as your inventory), beginning inventory total dollar amount, inventory ending dollar amount, items removed for personal reasons, and materials and supplies. You should also have business expense documentation. Deductible business expenses include items like business rent, home office expenses and contract labor.

Did You Know?

Excellent recordkeeping is crucial in the event of a tax audit, during which the IRS examines your tax return information to ensure the reported data is correct.

2. Understand qualified deductions and credits.

Tax deductions and credits are a critical part of the filing process. Tax deductions reduce your taxable income. Tax credits, on the other hand, directly reduce your business’s tax liability.

The number of business tax credits and deductions is extensive, including credits you may not know about that apply to particular industries, such as for biodiesel use or for employers who offer employee benefits like childcare.

If you think you may qualify for a deduction or credit, talk to your tax preparer. If you use tax preparation software, carefully answer all questions about your business operations.

Tip

Tax software and other tax solutions generally use step-by-step interviews to gather all information necessary to prepare your return. Following the step-by-step process is the best way to ensure your return is complete and correct.

3. Learn about the latest tax laws.

Regardless of how you prepare your taxes or pay to have them prepared, you must stay updated on recent and future small business tax law changes and how they may affect your business so you can plan and adapt accordingly.

The most significant recent changes for small business taxes include the end of special programs and tax relief put in place during the COVID-19 pandemic. For example, net operating losses carried forward generally cannot offset more than 80 percent of your taxable income. That limitation did not apply to net operating losses generated in 2023, 2023 or 2023. However, any net operating losses generated after 2023 are subject to the limitation of 80 percent of taxable income again.

On the positive side, the SECURE Act increases the credit for some employer contributions to employee pensions, and pass-through entities like partnerships and S corporations may still qualify for a 20 percent deduction based on their income.

4. Itemize business expenses.

According to Scott, detailing, itemizing and categorizing your business expenses ahead of time will save significant time and hassle come tax day.

Work closely with the bookkeeping and accounting teams (if your business is big enough) or with outside help to put yourself in a position to claim the maximum benefit from your expenses. In addition, the more organized your information, the more money you should save on your tax preparation bill.

5. Calculate projected payroll taxes.

Along with expenses and deductions, your payroll taxes should be up to date and calculated throughout the year. If you have employees, you generally must file at least quarterly, if not more often. You must also make payroll tax deposits as required or face steep penalties.

For very small businesses, payroll tax filing and payment obligations can be more significant than income taxes. Ensure you understand payroll taxes and include them in your business budget and planning.

6. Keep up with your home state’s tax issues.

Most tax professionals prepare your state return in addition to the federal return. However, you should pay as much attention to changes in state requirements as to IRS rules if you don’t want to be taken by surprise.

For example, some states take out loans from the federal government to meet unemployment benefits liabilities. Jamal Ayyad, head of product management at SurePayroll, noted that if your state has taken — but not repaid — those loans, there will be a reduction in the credit against the Federal Unemployment Tax Act tax rate. This means employers in those states must pay more.

A number of states may be affected, including Arizona, Arkansas, California, Connecticut, Delaware, Indiana, Kentucky, New York, North Carolina, Ohio, Rhode Island and South Carolina, as well as the U.S. Virgin Islands.

Did You Know?

The best states for small business taxes include Wyoming, South Dakota and Alaska. Some of the worst include New Jersey, New York and California.

Tip

Online tax software is an easy and convenient way to stay on top of your tax obligations.

Common tax season mistakes

Don’t let these common mistakes sabotage your tax season:

Waiting until the last minute. It takes time to find and organize your records, update your tax knowledge, and do everything else necessary to achieve optimum tax results for your business. Even working on your taxes a little at a time can make tax season go far more smoothly and efficiently.

Maintaining inadequate or disorganized records. Getting your business organized may seem challenging, but it’s much easier than dealing with chaos at tax time.

Blending personal and business finances. Having separate personal and business bank accounts and records is much more professional and greatly simplifies tracking business income and expenses at tax time.

Not asking for help in time. Tax professionals get busy during tax season. Make your appointment early. Be sure to schedule other help you may need, such as legal or bookkeeping help.

Get ready for tax season now

No matter what time of year it is, you can always take steps to prepare for the current tax season and for seasons to come. If tax prep seems overwhelming, do one thing now to get ready, such as organizing one file or opening a business checking account. Every step you take to improve organization and planning will pay you dividends in less time, frustration and expense at tax time.

Derek Walter contributed to this article. Source interviews were conducted for a previous version of this article.

Scenes From A Drone Trade Show

Northrop Grumman’s Global Hawk is the highest-flying of the military’s current fleet of UAVs. With its 116-foot wingspan, it can climb to 60,000 feet and has a range of 9,500 nautical miles. Another show-goer gives a sense of scale. Eric Hagerman

When most people think “trade show,” what comes to mind are harsh fluorescent lights and hollow convention halls, all filled with corporate drones (of the human variety) idly wandering through booths hyping the latest in office paper technology, stopping only to hover over bowls of stale candy and cheap swag.

The annual Association for Unmanned Vehicle Systems International (AUVSI) event in Denver, Co. is also a trade show, down to the expansive halls and harsh lights. But instead of the latest in corporate nothingness, its booths are filled with something far more interesting: the state-of-the-art in flying robots.

We were recently on hand to find out what this sort of trade show looks like. Launch the gallery above for our photo tour.

UAV Fuel Cell

Jogjaman Jap of Singapore’s Horizon Energy Systems shows off his company’s new plug-and-play hydrogen fuel cell for small UAVs. Its proprietary chemical hydride hydrogen generator means you just add water. It produces 200W of continuous power for six to seven hours.

Integrator’s “Ikea Fasteners”

The “Ikea Fasteners” on Insitu’s new modular Integrator UAV require just a quarter turn to secure the wings. The Navy plans to buy at least 200 of the small-tactical class aircraft. The gas-powered plane has a 16 foot wingspan, weighs 75 pounds, and can fly 24 hours on its gas-powered engine.

Integrator’s Creative Landing Gear

Clips on both wingtips of the Integrator serve as landing gear: They snag the line of Insitu’s SkyHook crane and snare the plane, whose engine immediately cuts when inertial sensors detect the sudden shift. Then the operators haul the plane down like laundry.

Instead of Booth Babes…

Drone trade shows have their own brand of superfluous booth porn: Wichita, Kansas–based McCauley shows off a carbon-fiber prop used on a… manned Cessna. They make props for unmanned systems, too.

Griffin Guided Missile

Raytheon’s new 33-pound Griffin guided missile fits the trend toward smaller and more accurate munitions, according to a spokesman for the weapon systems manufacturer. It can be directed to explode above a target, on impact, or on a fuse delay.

All-Weather Autonomous Bomb

Raytheon’s new GBU-53/B small diameter bomb is touted as an all-weather seeker, allowing UAV pilots to track and destroy targets regardless of weather conditions. It’s 69 inches long and weighs 204 pounds.

Flexible Circuitry

A web of flexible circuits germinated in the MIT engineering lab of professor Mary Boyce could allow electronics to be built into a wide variety of shapes, squeezing circuitry into tighter and more aerodynamic spaces.

Nano Drones Under Glass

AeroVironment showed off prototypes of its nano air vehicle, a hummingbird–sized flapping-wing UAV that one day could be used as a surveillance tool that blends into the natural environment.

SAMARAI Monocopter

A Lockheed Martin engineer holds the latest prototype of the SAMARAI monocopter drone, a unique vertical take off and landing (VTOL) configuration whose one wing whirls around a central hub like maple tree spinners

This Stalker’s Always Listening

Skeldar Copter Drone

Saab and Swiss UAV teamed up to produce a line of small UAVs including the fully automated Skeldar, which has a 15-foot rotor and a five-hour flight time.

Global Hawk

X-47B

Nose-to-nose with Northrop Grumman’s X-47B unmanned combat air vehicle, which is being developed for the Navy as a carrier-based bird.

Lightweight Eyes in the Sky

Apple Watch Series 5 Hits New All

Apple Watch Series 5 hits a new all-time low in today’s 9to5Toys Lunch Break, plus Pixelmator goes free, and Anker’s Black Friday sale is now live. Hit the jump for all that and more.

Apple Watch Series 5 drops further

Make sure to put your savings to work and grab a few extra Apple Watch bands as there are plenty of options out there to choose from. Our roundup of the best third-party options has a wide range of styles for just the right look. Give this leather band a try if you’re stuck on which option to choose from.

Pixelmator Pro goes free

The Black Friday app deals are now in full swing as most of the biggest developers are launching big-time price drops. One of which is the Pixelmator Team. Makers of one of the best photo/image manipulation apps out there, you can now score some notable deals on Pixelmator for Mac and iPad.

After first debuting back in April, Pixelmator Photo for iPad is going completely free for just 24 hours. The regularly $5 app is yet to see any price drops at all, so if you’re interested here, don’t miss the freebie sale. The Pro Mac version of the app is now down to $30 from the usual $40, which is 25% off the going rate. It has gone for less in the past, but only once, so now is as good a time as any to jump in. For more, check out our recent coverage here at 9to5Mac.

Annual Anker Black Friday sale now live

Anker’s annual Black Friday sale is now live over at Amazon with some of the year’s best prices on smartphone accessories, speakers, security cameras, and more. While we regularly feature Anker deals throughout the year, its Black Friday promotion marks a great time to pick up stocking stuffers for the techie in your life. If you (or someone you know) grabbed a new iPhone or Pixel device this year, the Anker Black Friday sale is the perfect opportunity to snag a few accessories. You’ll find all of our top picks from $10 right here.

iOttie’s Apple Watch and iPhone dock hits $16

iOttie via Amazon offers its OmniBolt Apple Watch and iPhone Dock for $16. As a comparison, it originally sold for $40 and trends for around $30 most days. This is a new Amazon all-time low price in both colors. iOttie’s all-in-one dock delivers a sleek home for both your Apple Watch and iPhone. You’ll need to supply your own charging cables for Apple Watch, but otherwise, everything required is here for a neat and tidy bedside setup. A MFI-certified Lightning adapter is built-in.

Belkin’s Thunderbolt 3 + USB-C hubs on sale from $75

Amazon offers the Belkin Thunderbolt 3 Dock Mini for $110. Normally selling for $150, today’s offer is good for a 26% discount, beats our previous mention by $18, and marks a new all-time low. For comparison, Best Buy’s current sale price sits at $130. Centered around a bus-powered design, this Thunderbolt 3 dock sports dual 4K-compatible HDMI outputs as well as USB 3.0, Gigabit Ethernet, and more. This makes it an ideal solution for more minimalist setups, or those looking to add some I/O versatility into their travel kit. Or grab Belkin’s USB-C Hub with Tethered USB-C Cable for $75.

9to5Mac Deal of the Month

OWC exclusive deal: Purchase an OWC Thunderbolt 3 14-Port Dock for

Purchase an OWC Thunderbolt 3 14-Port Dock for $294.99 and get a FREE USB-C Travel Dock (Gen 1).

Easily connect all of your devices

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Daisy-chain up to five additional Thunderbolt devices

Includes Thunderbolt 3 cable

Available in Silver and Space Gray

Best trade-in deals

9to5Mac also keeps tabs on all the best trade-in deals on iPhone, iPad, MacBook, Apple Watch, and more every month. Be sure to check out this month’s best trade-in deals when you decide it’s time to upgrade your device. Or simply head over to our trade-in partner directly if you want to recycle, trade, or sell your used devices for cash and support 9to5Mac along the way! Use code 9to5mac at check out for an extra $15 on all trades!

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Tax On Forex Trading In Australia

Forex trading has become increasingly popular in Australia and is now worth an estimated AUD$9 trillion daily. The foreign exchange market is larger than any other financial market, including traditional stocks or commodities. Here we have outlined what you need to know about trading forex in Australia and the tax rules involved.

How To Start Forex Trading In Australia?

The global forex market is worth an estimated $6 trillion. Unsurprisingly many want a piece of this highly liquid market. What is forex trading? So, let’s start with a basic understanding of what forex trading is. Forex or foreign exchange trading involves speculating on the increase or decrease of an exchange rate between two chosen currency pairs. It sounds simple right? For the most part, forex trading is straightforward but can be costly if you don’t master the basics and develop a good trading strategy.

What Do Beginners Need To Keep In Mind?

For a beginner starting to trade Forex, it is first vital to educate on the fundamental of forex trading. As with any new skill, you need to first learn the language or terminology.

Forex Pairs: You trade two currencies against each other, e.g., USA/AUD American Dollar against the Australian Dollar.

Major Pairs: always includes the US dollar, the most traded currency globally. Major pairs also include another strong currency, such as the British Pound or Australian Dollar, GBP/AUD.

Minor Pairs: two strong currencies, for example, the Canadian Dollar (CAD), New Zealand Dollar (NZD), and Japanese Yen (JPY). Major pairs never include the US Dollar (USD).

Exotic Pairs: includes one emerging or low-demand currency, such as Turkish Lira (TRY) or Danish Krone (DKK), and a strong currency, as mentioned above. Keep in mind that not all brokers offer volatile exotic pairs.

What are the most traded forex pairs? EUR/USD is the world’s most traded forex pair. Some other very popular FX pairs include AUD/USD, USD/JPY, USD/CAD, etc.

What Are The Taxation Rules For Forex Trading In Australia?

Are you looking to trade Forex in the long term and ensure that your trades are as profitable as possible? What percentage of tax is levied in Australia on forex trading, in comparison with western countries? Of course, each country has unique and specific taxation rules regarding investing and trading, and having a well-rounded understanding of your tax responsibilities needs consideration.

For instance, taxation in the United Kingdom depends on the particular type of trading activity you perform. For example, with Forex or spread betting trading accounts, no tax payment is required. On the other hand, full-time CFD trading is subject to capital gains tax. In Australia, on the other hand, forex traders are liable for tax. However, there are two categories to understand. Firstly, you need to determine whether you fall under the bracket of investor or trader.

A trader is someone who makes money from short-term speculation, holds assets for no longer than 12 months, and pays tax at personal tax rates. Do you fall under the category of investor? If you trade for more than 12 months and make a profit, you are liable to pay capital gains tax on forex trades. It is worth taking some time to understand what the current capital gains tax rate is and what discounts are available.

Are you a beginner trader and need some guidance? If you are a beginner forex trader, carefully consider the tax implications for your long-term trading and investing goals. Choose a broker with a high level of regulation and a reputation for being trustworthy. Carefully choosing a regulated and credible broker will protect you against fraudulent activities or malpractice and assist you in complying with any taxation requirements.

Conclusion

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