Private ruling: Share trading business
Date of advice: 6 May 2022
Published: July 2022
Ruling period: Financial year ending 30 June 20XX | Financial year ending 30 June 20XX
Date scheme commenced: 1 March 20XX

Ruling: Q1: Are you carrying on a business of Share trading? | A1: Yes. Weighing up the relevant facts and circumstances it is considered that you were engaged in a business of share trading for the 20XX and 20XX financial years. This is due to your activity having significant commercial purpose and character that would be expected of a share trading business. You can change from conducting an activity as a business to that of being an investor and vice-versa over time as your level of activity changes. You should evaluate your level of activity on a regular basis to see whether you are investing or carrying on a business.

Relevant facts and circumstances: You commenced your share trading activities on 1 March 20XX The trading was funded by a $XXX margin loan. For the 20XX financial year you had $X worth of total purchases from XXX buy transactions and XXX sell transactions. This resulted in a profit of $X. For the 20XX financial year you had $X worth of total purchases from XX buy transactions and XX sell transactions. This resulted in a loss of $X. You held on average each parcel of shares for approximately 100 days in the 20XX financial year and for approximately 14 days in the 20XX financial year. You carried out extensive research before and transactions occurred. To help with this you subscribed to Bloomberg, Australian Financial review, and the National Australian Bank. You spent roughly 2.5 hours each day reviewing the daily news before the Australian market opened. Once the market opened and trades were placed you would constantly monitor your trades. You limited your exposure to all your trades by having a plan to not let any trade go beyond a $20,000 loss. None of the shares that you have sold in both the 20XX and 20XX financial years were held for greater than 12 months.

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 102-5 | Income Tax Assessment Act 1997 section 102-10