Brokerage
The fee a broker charges each time you buy or sell shares or ETFs.
Brokerage is charged per trade, either as a flat fee for smaller parcels or a percentage of larger ones. Australian online brokers commonly charge between a few dollars and around $20 per trade.
It is not a deduction against your income. Brokerage on a purchase is added to your cost base, and brokerage on a sale reduces your proceeds, so it reduces your capital gain rather than your salary tax.
On small parcels the percentage impact is substantial. A $10 fee on a $500 trade is 2% before the investment has done anything, and the same fee applies again on the way out.
Why small trades hurt
Trading $500 with $10 brokerage costs 2% to buy and 2% to sell. On a $5,000 parcel the same fees are 0.2% each way — ten times more efficient.
The bit people get wrong
Brokerage is never deductible as an expense. Investors sometimes claim it against income by mistake; it belongs in the CGT calculation as part of the cost base.
Common questions
Is brokerage tax deductible?
No. It is a capital cost, added to the cost base on purchase and subtracted from proceeds on sale, reducing your eventual capital gain.
How do I minimise brokerage?
Trade less often and in larger parcels, and use a low-cost broker. Frequent small trades are where the cost quietly accumulates.
Do ETFs charge brokerage?
Yes, because they trade on the exchange like shares. That is on top of the fund's ongoing management fee.