Private ruling: Deductions
Date of advice: 9 February 2026
Published: 30 March 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did the Trust's share trading activities amount to carrying on a business, and were the shares considered trading stock under section 70-10(1) of the Income Tax Assessment Act 1997 (ITAA 1997) for the 20XX and 20XX income years? | A1: Yes. | Q2: Did the Trust's share trading activities amount to carrying on a business, and were the shares considered trading stock under section 70-10(1) of the ITAA 1997 for the 20XX, 20XX and 20XX income years? | A2: No. | Q3: Will the losses from buying and selling shares during the years ending 30 June 20XX and 30 June 20XX be deductible under section 8-1 of the ITAA 1997? | A3: No.

Relevant facts and circumstances: Person A has worked as a financial planner for over 25 years. Person A went into business with Person B. The Business is a financial planning business. The Business has always acted as agent for a partnership of trusts comprised of the Trust and Trust B. The Trust was established by Person A to be operated as an adjunct to the Business for the purpose of making and managing a portfolio of shares. Over the period 20XX to 20XX the Trust maintained a passive share portfolio comprised primarily of bank sticks (all major banks). The share portfolio was supported by a capital protected loan which was upgraded to a margin loan facility during 20XX. The Trust's activities up until the 20XX financial year had minimal trading activity, and the investments were limited to a handful of direct equities and wholesale unit trusts. During the 20XX financial year, the Trust started to more actively utilise the margin loan and actively trade its investments. As from 1 July 20XX, the Trust formally adopted a change in investment strategy and the associated business methods. This was a change to an active share trading activity which Person A conducted on behalf of the Trust, in addition to his involvement in the Business. Prevailing circumstances at the time included: • Person A had paid off the loan on their main residence and this freed up equity available to be injected into an active share trading activity • In March 20XX, the COVID-19 pandemic caused major disruption to financial markets. As a financial advisor, Person A was at the forefront of this volatility, both professionally and personally. With face-to-face client meetings replaced by virtual interactions Person A was freed up to explore other business opportunities • Recognising an opportunity to capitalise on heightened volatility, Person A leveraged their market knowledge, professional insights, access to institutional-grade information with a view to conduct profitable share trading activities for the Trust. The activity reflected a structured consistent approach to short and medium-term trading, most closely aligned with 'swing trading'. The Trust's trading strategy methods were discretionary and momentum-based, informed by: • Views of reputable economists and macro indictors • Familiarity with small and mid-cap companies commonly held by institutional fund managers with which Person A regularly engaged • Continuous monitoring of trade conditions and news flow. The focus was on companies which Person A understood well and believed had been temporarily oversold. The Trust used short positions and Exchanged Traded Fund (ETFs) in major market indices and commodities (e.g., BBOZ and OOO) to hedge risk and profit from anticipated market trends. The share trading activities were supported by the following additional resources: • Use of margin loan by the Trust to amplify position • Trading via NABtrade with Iress ViewPoint for real-time data and execution • Institutional-grade research from Morningstar, Lonsec and fund manager communication. The Trust followed a plan and consistent routine to generate profits from short and medium-term price movements and volatility, however there is no written business plan. The strategy was discretionary and momentum-based, focusing on securities in structural trends, mainly in the small to mid-cap space due to their higher profit potential. Systems in place by the Trust to preserve capital/limit losses were: • Stop-loss management: Positions were reduced or closed when losses approached XX%, or earlier if market conditions or company specific information indicated the likelihood of further downside. Decisions were made based on ongoing assessment of price action and news flow, and were discretionary in nature, based on Person A's assessment of data and sentiment. • Margin management: Positions were reduced or liquidated where necessary to manage risks associated with the margin loan and to avoid forced selling during periods of heightened volatility. • Moderation of trading in 20XX and 20XX as the strategy was adjusted as a risk management response to market conditions and to minimise the impact of the volatility and whipsaws experienced in previous years. • Use of ETFs for hedging: The Trust used exchange traded instruments designed to offset or protect other positions. These ETFs were not used as long term managed fund investments, but rather as trading and hedging tools. Many of these instruments hold futures contracts or other derivatives to provide inverse exposure to the underlying index. The tools and infrastructure used included: • Brokerage & Execution: NAD Trade with Iress ViewPoint subscription • Research access: Morningstar, Lonsec and regular institutional fund manager updates • Capital base: NAD margin loan facility. Person A also lent private money to the Trust. • Workstation: Dedicated dual-screen setup with one screen displaying a live trading terminal at all times. Person A typically spent more than x hours per day on trading-related activity which is more than XX% of his work hours including: • Live market hours (9:30am to 3:30pm) for execution and monitoring • Evening research and review of global markets • Ongoing evaluation of positions, risks and opportunities This level of time commitment was applied in addition to and in conjunction with that of Person A's role as a financial advisor. From the market low in March 20XX through to December 20XX, the All-Ordinaries Index rebounded by 50%, over which time the Trust completed approximately XX trades across XX different securities. This was due to a sharp market falls in early 20XX which triggered margin calls and forced liquidations at distressed prices. The losses realised during this period were the result of reactive and time-critical trading decisions required to manage margin risk and preserve solvency rather than long-term asset value decline. These losses materially reduced the capital base available for subsequent years. These securities ranged from micro, mid and large-cap equities through to leveraged exchange-traded funds; both long and short, which included positions over indexes and commodities. The total transaction value across this period was approximately $XX million. Many of these transactions involved short holding periods, with numerous positions sold within the same day, as well as other closed out within a few days or weeks. The same pattern of short-duration trading continued into the 20XX, 20XX and 20XX financial years. Although at a reduced level, the trading strategy remained the same as the Trust sought to manage both capital preservation and the cumulative impact of earlier losses. Trading continued using the same discretionary, momentum-based methodology and positions were still entered and exited with a short-term profit-making intention. Across these years, the Trust continued to execute trades over intraday, daily and weekly timeframes directed toward generating returns and revenue from short-term market movements. The trading model did not focus on dividend returns and accordingly, total dividends received over the trading period were only $xx. To better manage capital preservation and protect financial solvency, the Trust deliberately reduced the frequency of trading activity while maintaining the same trading strategy and methodology. After years of intensive market engagement, involving significant capital turnover, use of margin lending, and the constant management of market volatility, Person A recognised the need to step back to preserve personal wellbeing and stabilise financial resources. During the 20XX year, the Trust made a deliberate decision to cease active trading activities. This decision arose from Person A experiencing burnout from the cumulative financial and psychological impact of sustained losses in earlier years. The Trust has lodged its tax return for each of the years ending 30 June 20XX to 30 June 20XX on the basis that all profits and losses arising in consequences of its share trading activities have been capital in nature.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 70-10(1) | Income Tax Assessment Act 1997 section 995-1

Reasons for decision: Detailed Reasoning - Detailed reasoning: Trading stock is defined under section 70-10(1) of the ITAA 1997 to include anything produced, manufactured or acquired which is held for the purposes of manufacture, sale or exchange in the ordinary course of business. Subsection 995-1(1) defines 'business' to include 'any profession, trade, employment, vocation or calling, but does not include occupation as an employee'. However, this definition simply states what activities may be included in a business. It does not provide any guidance for determining whether the nature, extent, and manner of undertaking those activities amount to the carrying on of a business. Whether or not a person is carrying on a business is a question of fact and degree and is determined on a year-to-year basis. If a taxpayer's activities do not amount to the carrying on of a business in one income year that will not prevent them doing so in a later income year. Similarly, when the extent of an activity falls below what is required for that activity to be commercially viable the activity may no longer constitute the carrying on of a business. Taxation Ruling TR 97/11 income tax: am I carrying on a business of primary production? (TR 97/11) provides a number of indicators that are relevant to determining whether primary production activities constitute the carrying on of a business. The indicators are no different, in principle, from the indicators as to whether activities in any other area constitute the carrying on of a business. TR 97/11 lists the following indicators as relevant in determining if a business is being carried on: • whether the activity has a significant commercial purpose or character • whether the taxpayer has more than just an intention to engage in business • whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity • whether there is regularity and repetition of the activity • whether the activity is of the same kind and carried on in a similar manner to that of ordinary trade in that line of business • whether the activity is planned, organised and carried on in a businesslike manner such that it is described as making a profit • the size, scale and permanency of the activity, and • whether the activity is better described as a hobby, a form of recreation or sporting activity. These factors are considered in combination, no one factor is decisive. Whether a business is being carried on depends on the large or general impression gained. The question of whether an entity is engaged in share trading is essentially based on the facts of the situation. This matter has been addressed in a number of court cases. In Case 6297 (1990) 21 ATR 3747 (Case X86), 90 ATC 621 (Case 6297), the following specific indicators of carrying on a business for someone carrying on a share market activity were listed as: • the nature of the activities and whether they have the purpose of profit-making • the complexity and magnitude of the undertaking • an intention to engage in trade regularly, routinely, or systematically • operating in a business-like manner and the degree of sophistication involved • Whether any profit or loss is regarded as arising from a discernible pattern of trading • The volume of the taxpayer's operation and the amount of capital employed by them More particularly the case looked at specific indicators in respect of share traders: • repetition and regularity in the buying and selling of shares • turnover • whether the taxpayer is operating to a plan, setting budgets and targets, keeping records • maintenance of an office • accounting for the share transactions on a gross receipt's basis • whether the taxpayer is engaged in another full-time occupation In the case of share trading, repetition and regularity are considered to be important indicators on whether or not a business is being carried on, with the size and scale of the activity being supporting factors. We will now consider the indicators from TR 97/11 below. | Detailed Reasoning - Whether the activity has a significant commercial purpose or character: This indicator requires that you be able to show that the activity is carried on for commercial reasons and in a commercially viable manner. You need to be able to show that the interaction between the size and scale of the activity, the repetition and regularity and the intention and prospect of profit are sufficient to conclude that the activity has a significant commercial purpose. | Detailed Reasoning - Whether the taxpayer has more than just an intention to engage in business: The intention of the taxpayer in engaging in the activity is a relevant indicator in determining whether a business is being carried on. The intention of the taxpayer in engaging in the activity is a relevant indicator, however, a mere intention to carry on a business is not enough. Brennan J in Inglis v. FC of T 80 ATC 4001 at 4004-4005; (1979) 10 ATR 493 at 496-497 said that: 'The carrying on of a business is not a matter merely of intention. It is a matter of activity.... At the end of the day, the extent of activity determines whether the business is being carried on. That is a question of fact and degree.' | Detailed Reasoning - Whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity: It is important to show how the activity can make a profit. Strong evidence of an intention to make a profit occurs when the taxpayer has conducted research into his/her proposed activity, consulted experts or received advice on the running of the activity and the profitability of it before setting up the business. This was the situation in FC of T v. JR Walker 85 ATC 4179; (1985) 16 ATR 331. In Hope at CLR 8-9; ATC 4390; ATR 236, Mason J indicated that the carrying on of a business is usually such that the activities are: '... engaged in for the purpose of profit on a continuous and repetitive basis.' In Smith v. Anderson (1880) 15 Ch D 247 at 258, Jessell MR said that: '... anything which occupies the time and attention and labour of a man for the purpose of profit is business.' In Case H11 76 ATC 59 at 61; 20 CTBR (NS) Case 65 at 603, the Chairman of Board of Review No 1 said: 'In determining whether a business is being carried on it is, in my view, proper to consider, as one of the elements, whether the activities under consideration could ever result in a profit...' The situation may arise where a taxpayer is carrying on a business and has an intention to make a profit but the objective evidence is such that a profit is unlikely to be made in the short term. Bowen CJ and Franki J in Ferguson at ATC 4264; ATR 876 stated that '... an immediate purpose of profit-making in a particular income year does not appear to be essential...'. Thus, where short term losses are expected it may be that a business is nevertheless being carried on: see Tweddle v. FC of T (1942) 7 ATD 186; (1942) 2 AITR 360 | Detailed Reasoning - Whether there is regularity and repetition of the activity including the size, scale and permanency of the activity: It is often a feature of a business that similar sorts of activities are repeated on a regular basis. The repetition of activities by the same person over a period of time on a regular basis helps to determine whether there is the 'carrying on' of a business. For example, in Hope the 'transactions were entered into on a continuous and repetitive basis', such that the taxpayer's activities 'manifested the essential characteristics required of a business'. | Detailed Reasoning - Whether the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business: An activity is more likely to be a business when it is carried on in a manner similar to that in which other participants in the same industry carry on their activities. Lord Clyde in IR Commissioners v. Livingston at TC 542 said that: '... the test, which must be used to determine whether a venture... is, or is not, "in the nature of trade", is whether the operations involved in it are of the same kind, and carried on in the same way, as those which are characteristic of ordinary trading in the line of business in which the venture was made.' | Detailed Reasoning - Whether the activity is planned, organised and carried on in a businesslike manner such that it is directed at making a profit: A business is characteristically carried on in a systematic and organised manner rather than on an ad hoc basis. An activity should generally conform with ordinary commercial principles to amount to the carrying on of a business. In Ferguson, Fisher J said at FLR 324-325; ATC 4271; ATR 884: '... the venture as a whole had a commercial flavour, was conducted systematically and,... in a business like manner. It could not be said that there was anything haphazard or disorganised in the way in which he carried out the activity.' | Detailed Reasoning - Whether the activity is better described as a hobby, a form of recreation or a sporting activity: The pursuit of a hobby is not the carrying on of a business for taxation purposes. As was said in Ferguson at ATC 4265; ATR 877: '... if what he is doing is more properly described as the pursuit of a hobby or recreation or an addiction to a sport, he will not be held to be carrying on a business, even though his operations are fairly substantial.' (emphasis added) Application to circumstances Significant commercial purpose or character While the Trust doesn't have a formal written business plan, an outline has been provided. Additionally, given the extensive experience of Person A, we accept that the level of skill needed to carry out the number of trades in 20XX and 20XX was significant and of a professional nature. Additionally, Person A was actively involved in the share market outside of the Trust as a financial advisor, and invested a significant amount of capital into the Trust for the trading activities. Though losses were made, the number of trades in the 20XX and 20XX income years were of significant size. trustee spent more than x hours per day trading for the Trust, in addition to their financial planner duties, and though the Trust made losses in the 20XX and 20XX years, due the size and scale of the trading, it is accepted there was an intention to make a profit. Overall, it is accepted that the Trust's trading activities in the 20XX and 20XX income years had a significant commercial purpose or character. Intention From the 20XX financial year, the Trust significantly increased the intensity of its trading activities, including utilisation of a margin loan facility and the use of systems and tools to support ongoing investment decision-making and execution. The Trust's intention to engage in business is supported by its conduct and activities in the 20XX and 20XX income years, which demonstrates more than a mere intention to carry on a business, and is consistent with the principles outlined in Inglis v FC of T. Purpose and prospect of profit The Trust's activities were carried out on a continuous and repetitive basis, with a significant volume of transactions in the 20XX and 20XX income years and approximately x hours per day allocated to trading activities. Person A's experience as a financial planner supports the commercial nature of the activity and its capacity to generate profits. Although the Trust did not achieve net profits, short-term losses do not preclude the existence of a profit-making purpose. Regularity and repetition For the Trust, the volume of transactions was significant, with xx trades completed in 20XX and xx trades in 20XX, reflecting sustained and systematic activity over each year. Many transactions involved short holding periods, including same-day disposals and positions closed within days or weeks, further demonstrating repetitive trading behaviour. When considered in the context of the time commitment and the substantial funds deployed, the size, scale and permanency of the Trust's activities support a finding of regular and continuous business activity rather than isolated or occasional transactions. Same kind and similar manner The level of shares traded by the Trust is higher than what would ordinarily be associated with a passive investor and aligns with the trade frequency commonly observed among professional share traders who actively buy and sell to take advantage of short-term price movements. Person A has prior professional experience as a financial planner, providing skills and market knowledge consistent with those typically held by individuals working in financial markets. The time commitment made by the Person A is consistent with the level of involvement expected of individuals engaged in a share-trading business, rather than those managing long-term investments. The trading activities are conducted in a manner consistent with the way a business of share trading is ordinarily carried on in the industry. Planned, organised and businesslike manner The Trust's activity was conducted systematically rather than on an ad hoc basis, with a trading account, planned use of a loan facility, dedicated systems and tools, and a dedicated workspace. Person A conducted research and analysis, informed by his experience as a financial planner, alongside regular monitoring of markets and positions. When considered together with the size, scale, repetition and commercial intention of the activity, the Trust's activities in 20XX and 20XX appear to be planned and organised in a businesslike way. Hobby, recreation or sporting activity The Trust's activities are not a hobby, a form of recreation or a sporting activity. Conclusion When everything is considered in combination, the intention, repetition, size and scale, organisation and commerciality of the Trust's activities in the 20XX and 20XX income years demonstrate more than a mere intention to carry on a business. Accordingly, it is concluded that the Trust was carrying on a share trading business in the 20XX and 20XX income years. | Detailed Reasoning - Question 2: Did the Trust's share trading activities amount to carrying on a business, and were the shares considered trading stock under section 70-10(1) of the ITAA 1997 for the 20XX, 20XX and 20XX income years? | Detailed Reasoning - Detailed reasoning: As stipulated in Question 1, whether or not a person is carrying on a business is a question of fact and degree and is determined on a year-to-year basis. Additionally, when your activity changes in a major way you must reassess whether you are in business. We will now explore the same indicators from TR 97/11 for the 20XX, 20XX and 20XX years below. These are: • Whether the activity has a significant commercial purpose or character • Whether the taxpayer has more than just an intention to engage in business • Whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity • Whether there is regularity and repetition of the activity including the size, scale and permanency of the activity • Whether the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business • Whether the activity is planned, organised and carried on in a businesslike manner such that it is directed at making a profit • Whether the activity is better described as a hobby, a form of recreation or a sporting activity Application to circumstances Significant commercial purpose or character Although the Trust has provided an outline of its intended activities, there is no formal, documented business plan. This indicates a lack of planning typically expected of a business activity conducted in a commercial manner. The activity has also produced tax losses in the 20XX, 20XX, and 20XX income years. While losses in isolation do not determine whether an activity is commercial, persistent and consecutive losses, combined with the lack of formal business planning, suggest the activity is not being carried out in a manner consistent with profit-making intent. Although the value of individual trades undertaken by the Trust was significant, the number of trades was relatively low and declined over the three-year period. Overall, when viewed objectively, the Trust's activities lack the indicators of a significant commercial undertaking. Intention In the 20XX, 20XX and 20XX income years, the Trust's conduct shows a shift towards capital preservation and investment management. Trading activity reduced, shares were held for longer and Person A stepped back to stabilise finances and wellbeing, leading to a deliberate cessation of active trading in 20XX. Taken together, these actions demonstrate that any prior intention to carry on a trading business had changed. Purpose and prospect of profit Trade numbers declined significantly in the 20XX, 20XX and 20XX income years, and although the short-duration trading pattern continued, it did so only at a reduced level that does not reflect continuous, business-like actions directed toward profit. The trading in 20XX and 20XX was driven by a risk-avoidance response rather than a plan to generate profit, and no evidence suggests that the activity was capable of producing a commercial return. Losses were incurred in all three years. Together with reduced activity levels, ongoing losses, and absence of evidence supporting a prospect of profit. Regularity and repetition In contrast to the 20XX and 20XX income years, the Trust's activities in the 20XX, 20XX and 20XX income years lacked the level of regularity, repetition and scale ordinarily associated with the carrying on of a share trading business. In the 20XX income year, the number of transactions declined significantly, from xx in 20XX to only xx trades, and the number of securities held was reduced by almost half. This reduction reflects a significant decrease in both the frequency of transactions and the scope of the activity. The trading pattern in these later years no longer demonstrated the continuous, repetitive and high-volume nature that had characterised the earlier business-like activity. Instead, the transactions were more consistent with the management of an investment portfolio rather than systematic trading conducted on a commercial basis. Same kind and similar manner The significant reduction in trading frequency in the 20XX, 20XX and 20XX income years meant that the activity more closely resembled that of a share investor managing a portfolio for longer-term returns rather than actively trading to profit from short-term price movements. This is further evidenced by the substantial dividends received in the 20XX income year, which indicates that securities were held for longer periods, consistent with an investment strategy rather than trading stock turnover. The nature of the activity in these years aligns with the ordinary conduct of a share investor and lacks the higher share trades, short holding periods and transactional intensity commonly observed in professional share trading businesses. Planned, organised and carried on in a businesslike manner Although the Trust continued to utilise existing trading accounts, loan facilities and systems, the manner in which the activity was conducted in the 20XX, 20XX and 20XX income years no longer reflected a business carried on in a commercial and businesslike way. Person A deliberately stepped back from active trading to preserve personal wellbeing and stabilise financial resources, reflecting a conscious shift away from systematic, profit-directed operations. By 20XX, a deliberate decision was made to cease active trading altogether. These actions indicate that the activity was no longer planned, organised or pursued with the commercial intent and profit-driven focus characteristic of a business. Instead, the Trust's conduct in these years is more consistent with the passive management of investments rather than the carrying on of a share trading business. Hobby , a form of recreation or a sporting activity The Trust's activities are not a hobby, a form of recreation or a sporting activity. Conclusion Having regard to the overall impression gained from the Trust's activities in the 20XX, 20XX and 20XX income years, it is concluded that the Trust was not carrying on a share trading business during this period. The level of activity materially declined and no longer displayed the repetition, regularity, scale or commercial character required to constitute a business under TR 97/11. The Trust's conduct reflects a shift away from active, share trading to the management of an investment portfolio, supported by the change in trading behaviour, the holding of securities for income returns resulting in dividends, and the absence of business-like planning. Accordingly, for the 20XX, 20XX and 20XX income years, the Trust's activities are properly characterised as investment activities rather than the carrying on of a business. | Detailed Reasoning - Question 3: Will the losses from buying and selling shares during the years ending 30 June 20XX and 30 June 20XX be deductible under section 8-1 of the ITAA 1997? | Detailed Reasoning - Detailed reasoning: Section 8-1 states you can deduct from your assessable income any loss or outgoing to the extent that: a. it is incurred in gaining or producing your assessable income; or b. it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. However, you cannot deduct a loss or outgoing under this section to the extent that: a. it is a loss or outgoing of capital, or of a capital nature; or b. it is a loss or outgoing of a private or domestic nature; or c. it is incurred in relation to gaining or producing your exempt income or your non-assessable non-exempt income; or d. a provision of this Act prevents you from deducting it. Taxation Ruling 92/4 Income tax: whether losses on isolated transactions are deductible (TR 92/4) provides guidance in determining whether losses from isolated transactions are deductible under section 8-1 of the ITAA 1997. The term 'isolated transactions' refers to: a. those transactions outside the ordinary course of business of a taxpayer carrying on a business; and b. those transactions entered into by non-business taxpayers. Paragraph 4 of TR 92/4 explains losses from an isolated transaction is generally deductible under section 8-1 if: a. in entering into the transaction the taxpayer intended or expected to derive a profit which would have been assessable income; and b. the transaction was entered into, and the loss was made, in the course of carrying on a business or in carrying out a business operation or commercial transaction. Taxation Ruling 92/3 Income tax: whether profits on isolated transactions are income (TR 92/3) at paragraph 12 explains for a transaction to be characterised as a business operation or a commercial transaction, it is sufficient if the transaction is business or commercial in character. Paragraph 46 to 49 of TR 92/3 explains that if a taxpayer enters into a transaction in the course of carrying on a business, it is not necessary to consider whether it is a business operation or commercial transaction. However, it is necessary to consider this issue if the taxpayer is not carrying on a business or if the transaction or operation is not in the course of the taxpayer's business, e.g. if a sole trader carrying on a retail business acquires shares. For a transaction to be characterised as a business operation or a commercial transaction, it is sufficient if the transaction is business or commercial in character (see Whitfords Beach at 150 CLR 379; 82 ATC 4044; 12 ATR 707 ). Whether a particular transaction has a business or commercial character depends very much on the circumstances of the case. In very general terms, a transaction or operation has the character of a business operation or commercial transaction if the transaction or operation would constitute the carrying on of a business except that it does not occur as part of repetitious or recurring transactions or operations. Some factors which may be relevant in considering whether an isolated transaction amounts to a business operation or commercial transaction are the following: a. the nature of the entity undertaking the operation or transaction; b. the nature and scale of other activities undertaken by the taxpayer; c. the amount of money involved in the operation or transaction and the magnitude of the profit sought or obtained; d. the nature, scale and complexity of the operation or transaction; e. the manner in which the operation or transaction was entered into or carried out; f. the nature of any connection between the relevant taxpayer and any other party to the operation or transaction; g. if the transaction involves the acquisition and disposal of property, the nature of that property; and h. the timing of the transaction or the various steps in the transaction. Application to circumstances In this case, as discussed in Question 2 the Trust is not carrying on a business for the 20XX and 20XX income years. Therefore, the transaction was not entered into, and the loss was not made, in the course of carrying on a business. As it has been concluded that the Trust was not carrying on a share trading business in the 20XX and 20XX income years, it is necessary to consider whether the transactions undertaken in those years instead constitute isolated transactions. While the value of individual transactions remained relatively high, the number of trades conducted in 20XX and 20XX was small in scale when compared to prior years and lacked the repetition and commercial intensity required to characterise the activity as a business operation or commercial transaction. Further, the Trust incurred overall losses for both years, and the receipt of dividends in 20XX indicates a change in intention toward longer-term holding for investment returns rather than short-term share trading. In summary, in weighing up all the factors from above, including the nature, scale and manner of the transactions, it is considered that the transaction/s were not entered into, and the losses were not made, in carrying out a business operation or commercial transaction for the 20XX and 20XX income years. Therefore, the losses from buying and selling shares in the 20XX and 20XX income year are not deductible under section 8-1 of the ITAA 1997.