Mehta and Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (2011/2220)
Judgment date: 13 April 2012
Date published: 1 June 2012
Decision outcome: The Tribunal set aside the Commissioner's objection decision and remitted the matter to the Commissioner with the direction that in the tax year ending 30 June 2009 the taxpayer carried on the business of trading in shares.

Summary of decision:

Overview of facts:
The taxpayer was in full time employment at all times during the income years under review. On 26 June 2007, the taxpayer made an application for a margin lending facility and soon thereafter made his first purchase of shares. | During the income tax year ended 30 June 2008, the taxpayer made a total of 32 purchases and 3 sales. The taxpayer did not regard himself to be in a business of share trading for the year ended 30 June 2008. | During the income year ended 30 June 2009, the taxpayer carried out a total of 22 purchases and 27 sales of shares. He contributed $150,000 of his own capital to purchase shares and borrowed another $500,000 from BT Australia. The taxpayer also established a dedicated office for the share trading business in his home. | In his income tax return for the year ended 30 June 2009, the taxpayer claimed a loss of $125,293. | The Commissioner disallowed the claim on the basis that the taxpayer was not carrying on a business of share trading. The taxpayer objected and then applied to the Administrative Appeals Tribunal for review of the objection decision which affirmed the original decision. | Issues decided by the tribunal | The Tribunal found that the taxpayer was in the business of carrying on a business of share trading in the 2009 income year.

Issues decided:
The Tribunal found that the taxpayer was in the business of carrying on a business of share trading in the 2009 income year.

ATO view of decision:
The case was decided on its facts and will not have any impact on any existing or future litigation proceedings.

Administrative treatment:
None | Implications for ATO precedential documents (Public Rulings & Determinations etc) | None | Implications for Law Administration Practice Statements | None

Legislative references: Income Tax Assessment Act 1936 s 262A Income Tax Assessment Act 1997 s 8-1 Taxation Administration Act 1953 s 14ZZK
Case references: Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 90 ATC 4088 (1990) 20 ATR 1370 Federal Commissioner of Taxation v Radnor Pty Ltd (1991) 102 ALR 187 91 ATC 4689 (1991) 22 ATR 344 Federal Commissioner of Taxation v Whitfords Beach Pty Ltd (1982) 150 CLR 355 82 ATC 4031 (1982) 12 ATR 692 Hope v Bathurst City Council (1980) 144 CLR 1 80 ATC 4386 (1980) 12 ATR 231 John v Federal Commissioner of Taxation (1989) 166 CLR 417 89 ATC 4101 (1989) 20 ATR 1 Martin v Federal Commissioner of Taxation (1953) 90 CLR 470 North Australian Cement Limited v Federal Commissioner of Taxation (1989) 89 ATC 4765 (1989) 20 ATR 1058 Spriggs v Federal Commissioner of Taxation (2009) 239 CLR 1 2009 ATC 20-109 (2009) 72 ATR 148 The Commissioners of Inland Revenue v Livingston (1927) 11 TC 538 Thomas v Federal Commissioner of Taxation [1972-73] ALR 368 3 ATR 165 72 ATC 4094 Williams v Federal Commissioner of Taxation (1972) 128 CLR 645 72 ATC 4157 (1972) 3 ATR 236
Subject references: Income tax whether carrying on a business of share trading or investing in shares