Private ruling: Am I in the business of share trading
Date of advice: 2 March 2019
Published: May 2019
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Does your activity amount to the carrying on of a business? | A1: Yes. You meet the relevant factors contained in Taxation Ruling TR 97/11. Further information about carrying on a business can be found by searching 'QC 31733' on ato.gov.au

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You buy and sell shares using an online account to undertake the transactions. You are employed on a part time basis working X days a week and you dedicate between X and X hours a week on share trading where you undertake trend analysis, researching analysts’ recommendations and reading business articles from newspapers and financial publications. In July 20XX you decided to be more active in the share market. You made X buy transactions worth $X and X sell transactions worth $X in the 20XX-XX financial. Prior to July 20XX you only engaged in share trading on a sporadic basis with significantly less share trades. You operated your trading activity in a businesslike manner by setting profit targets, monitored your trading stock prices and operating performance. You worked from your home in a dedicated space to conduct the trading activities. You have a business plan. The shortest holding period was four days whilst the average was X days. Your strategy is based on purchasing shares which price had fallen and holding them for a short period of time and then selling them once the price increased again. If the share price falls further than expected, those shares are held longer than expected while the share price recovers. As part of your decision making process, you evaluate all the opportunities you could identify and select the company that you consider would allow you to make the most efficient use of the money allocated to your share trading. You trade in a manner that you consider that you have the most experience and expertise in identifying opportunities to make a profit. From January 2018 onwards there was a decline in trading due to capital tied up in a company; however you maintained your businesslike manner by researching and observing stock prices and trading when possible. You do not hold shares for the purposes of receiving dividends.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 8-1