Ask Colin

Should I include brokerage in the cost of my stockholdings?

As with most aspects of investing, there is no single right answer to this question. It will depend to some extent on how you do your accounting and may have tax implications.

What I do is to record the net cost of my purchases including brokerage and GST. This is my cost for tax purposes because my fund is not registered for GST. Likewise, I record the net cost of my sales including brokerage and GST. This keeps everything simple for tax purposes, bearing in mind that my fund does not pay tax and in my other portfolio, I am taxed as a simple taxpayer investing as a natural person for tax purposes and for capital gain tax purposes those amounts are my costs and proceeds. I have no pre-CGT holdings that would complicate this.

If your situation is different to mine, it might be appropriate to keep purchase price, sale proceeds, brokerage and GST as separate items in your accounting.

So, the answer  is that it all depends... You may need to get advice on this with respect to tax and accounting for tax, something I am not licensed to do for you.

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