Private ruling: Business - am I in business - shares and cryptocurrency
Date of advice: 2 October 2025
Published: 24 November 2025
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: DD MM 20XX

Ruling: Q1: Are the losses from your shares and cryptocurrency deductible as business losses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.

Relevant facts and circumstances: Background You are an individual and an Australian resident. In 20XX you obtained full-time employment and have worked full-time during the relevant income years. Your employment is unrelated to your share and cryptocurrency activity. Investing history You began purchasing shares over 5 years ago. Prior to this, you had minimal exposure to trading. Your interest in trading began through conversations with colleagues. Over time, you have invested in shares listed on the Australian Stock Exchange (ASX), US stock markets, as well as cryptocurrency assets. Previously, you self-assessed that your share and cryptocurrency activity was investment income and held your assets on capital account. Activity not reported as a business You were not aware that your activities could be considered a business. You therefore did not capture or report all details relating to your shares and cryptocurrency as a business activity. At the time, you believed that only traditional models such as restaurants or retailers qualified as businesses. You explored the opportunity of purchasing a traditional business, but did not proceed. You did not seek professional advice about whether your share and cryptocurrency activity amounted to carrying on a business due to personal factors at the time. During the 20XX income year, you sought advice from a tax agent about your activity being a business. You felt that trading gave you more flexibility than a traditional business as it does not require employees and allows you to work at your own pace. You viewed it as a practical way to grow your capital and create another income stream. This process was delayed as your previous tax agent became uncontactable. You have since approached another tax agent to assist you with your affairs. After developing a better understanding and comfort in financial markets, you decided to sell real property and redirect your focus towards your share activity. Share and cryptocurrency strategy You began developing your own trading strategy and have refined it by adapting to market conditions and using new tools. You have engaged in self-directed learning from various platforms, webinars, e-books, podcasts, and market news. You have practised analysing charts and reviewing technical analysis tutorials to understand more about trading. You have not completed any formal courses. You have not sought out professional assistance courses due to the cost and additional obligations attached. You set percentage-based limits on how much you risk on each trade and adjust for volatility where needed. For example, your maximum risk per trade is 2-5% of your total portfolio value when the particular asset is not meant to be volatile. You try to preserve your capital by setting clear limits on how much you risk on each transaction. You don't put too much into one asset and spread your investments across different types of companies. You keep a close eye on your portfolio so that you can make changes if something isn't working. Your typical profit targets range from 5-15% depending on the particular asset. You have stop-losses generally 3-7% below entry, adjusted per asset and based on market conditions. You realise your gains when assets hit your profit targets or stop-losses. The proceeds are either reinvested or held in cash for future transactions. Share and cryptocurrency activity Your trading decisions are made manually based on a mix of technical indicators and general market sentiment. You do not use an algorithm or automated system for your activity. You describe your activity as 'short- to medium-term', meaning that you tend to hold positions from several weeks up to several months. You don't view a 6-month holding period as 'short-term' due to the volatility of the market. Your holding periods depend on price moment, technical signals, and market conditions. You monitor positions daily. You use a personal custom spreadsheet that refreshes each day with updated market positions. It highlights key indicators through built-in formulas to assist in your decision-making. You estimate from looking at your daily routine that you spend approximately 1-2 hours per day on the activity. You spend this time reading market news, updating watchlists, conducting chart analysis, and preparing for transactions. You adjust watchlists and read substantial news updates each day. Your activity is tracked electronically through various platforms and your personal spreadsheet. You have incurred expenses for software and subscriptions which you use for your activity. You have not maintained a diary or formal log as you were unaware of the specific record-keeping requirements. You now keep structured logs to track your research, trading activities and your time spent on the activity. You do not have a business plan in writing. Transactions summary You have provided reports which indicate that your share activity made a capital loss of $X in the 20XX income year and a capital loss of $X during the 20XX income year. You have provided reports which indicate that your cryptocurrency activity made a capital gain of $X in the 20XX income year and a capital gain of $X in the 20XX income year. You have provided spreadsheets which show each of your share and cryptocurrency transactions. You did not report trading stock related to your activity in your tax returns for the relevant income years. The income from your share and cryptocurrency activity has not been reported as business income in your tax returns.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 6-10 | Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 15-15 | Income Tax Assessment Act 1997 Division 70 | Income Tax Assessment Act 1997 section 70-10 | Income Tax Assessment Act 1997 section 102-5 | Income Tax Assessment Act 1997 section 102-10 | Income Tax Assessment Act 1997 subsection 108-5(1) | Income Tax Assessment Act 1997 section 118-20 | Income Tax Assessment Act 1997 section 118-25 | Income Tax Assessment Act 1997 section 995-1(1)

Reasons for decision: Detailed Reasoning - Deductions for business: The rules for general deductions are contained under section 8-1 of the ITAA 1997. You can deduct from your assessable income any loss or outgoing to the extent that it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. You can't deduct outgoings that are of a capital, private or domestic nature, or that relate to earning exempt income. | Detailed Reasoning - Income from share trading: Gains and losses from your share and cryptocurrency activity may be treated either as investment or business income for income tax purposes. Investment income A CGT asset is any kind of property, or a legal or equitable right that is not property under subsection 108-5(1) of the ITAA 1997. Section 118-20 of the ITAA 1997 reduces a capital gain made from a CGT event by any amount that is assessable outside of the CGT provisions. Your activity may be regarded as investing. In this scenario, the shares and cryptocurrency would be considered capital assets. Any gains resulting from the disposal of shares would be income as a capital gain. Any losses sustained on the disposal of shares would be a capital loss. The income would be statutory income under section 6-10 of the ITAA 1997 and assessable under section 102-5 of the ITAA 1997, while a loss would be deductible under section 102-10 of the ITAA 1997, but only against capital gains. Business income Trading stock is defined under section 70-10 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. Under section 118-25 of the ITAA 1997 a capital gain or a capital loss you make from a CGT asset is disregarded if at the time of the CGT event the asset is your trading stock Your activity may be considered to constitute carrying on a business. In this scenario, the shares and cryptocurrency would be regarded as trading stock and any gains or losses would be included as assessable income. The income would be ordinary income and assessable under section 6-5 of the ITAA 1997, while expenses would be deductible under section 8-1 of the ITAA 1997. To determine which treatment applies to your situation, it needs to be determined whether your share trading activities amount to carrying on a business. | Detailed Reasoning - Carrying on a business: 'Business' is defined under section 995-1(1) of the ITAA 1997. It includes any profession, trade, employment, vocation or calling, but does not include occupation as an employee. The Commissioner considers various indicators to determine whether a business is being carried as contained in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? Although this ruling discusses primary production businesses, the indicators can be applied broadly to any business. Paragraph 13 of TR 97/11 lists the 8 business indicators as follows: No single indicator will be decisive in determining whether a business is carried on. Whilst each case might turn on its own particular facts, the determination of the question is generally the result of a process of weighing all the relevant indicators. The indicators must be considered in combination and as a whole. Where there is no overall profit motive and the activity looks like it will never produce a profit, it is unlikely that the activity will be considered to be a business. In Case 6297 (1990) 21 ATR 3747, the following specific indicators of carrying on a business for someone carrying on a share market activity were listed as: Additional indicators that were considered particularly relevant to share traders: In Hartley v Federal Commissioner of Taxation (2013) AATA 601, the Administrative Appeals Tribunal affirmed a decision of the Commissioner that a taxpayer was a share investor and was not carrying on a business of share trading, and denied deductions that had been claimed on the premise that a business existed for the relevant years. In this case, the taxpayer was a full-time council employee during the relevant income years. According to the taxpayer, they had been actively involved in the share market for many years, which occupied about 15 hours of their time per week. For the income years relevant to the taxpayer, they lodged tax returns claiming significant deductions on the basis that they were carrying on a business of share trading. After an audit, the Commissioner determined that the taxpayer was a share investor and issued assessments refusing the deductions. The Tribunal considered each of the relevant factors established in case law (in particular, the factors listed in Case 6297 ) in determining whether or not the taxpayer was engaged in a business of share trading. Although noting that the 'matter was finely balanced', the Tribunal was of the view that the factors pointing against the existence of a share trading business were more significant than those pointing in favour of the existence of a share trading business. The factors in favour of the Commissioner's position identified by the Tribunal included the following: | Detailed Reasoning - Isolated commercial or profit-making transactions: Income generated through isolated transactions outside the ordinary course of business may be assessable under section 6-10 of the ITAA 1997 as statutory income through section 15-15 of the ITAA 1997. To be considered as assessable income under this provision, these transactions must be entered into for the purpose of making a profit while carrying out a business operation or commercial transaction. The Full Court of the High Court of Australia in FC of T v The Myer Emporium Ltd (1987) 163 CLR 199 found that an isolated profit-making transaction outside the course of a taxpayer's ordinary business existed. This case remains the Australian authority for isolated profit-making transactions. The Commissioner's view of this case is contained in Taxation Ruling TR 92/3 Income tax: whether profits on isolated transactions are income . Paragraph 49 of TR 93/2 provides that 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. The factors that the Commissioner considers in determining whether transaction proceeds are profits from an isolated transaction, are: • the nature of the entity undertaking the operation or transaction, • the nature and scale of other activities undertaken by the taxpayer, • the amount of money involved in the operation or transaction and the magnitude of the profit sought or obtained, • the nature, scale and complexity of the operation or transaction, • the manner in which the operation or transaction was entered into or carried out, • the nature of any connection between the relevant taxpayer and any other party to the operation or transaction, • if the transaction involves the acquisition and disposal of property, the nature of that property, and • the timing of the transaction or the various steps in the transaction. The Full Federal Court in Greig v Commissioner of Taxation [2020] FCAFC 25 ( Greig's case )considered whether a taxpayer, who was employed as a full-time senior executive and not otherwise carrying on a business during the relevant period, acquired shares in Nexus Energy Limited (Nexus) in a 'business operation or commercial transaction'. In concluding that the taxpayer's acquisition of Nexus shares had the character of a business operation or commercial transaction, Kenny and Steward JJ had regard to the following matters: • the taxpayer's 'sophisticated' plan to generate cash profits prior to his retirement in 4 to 5 years' time by acquiring shares in large volumes and selling them quickly at a substantial profit, • the taxpayer acquired the Nexus shares in a 'systematic' fashion on 64 occasions, • the acquisitions of Nexus shares were part of, and indistinguishable from, the taxpayer's other share-trading activities which included the frequent and short-term acquisition and sale of 44 other stocks on 218 occasions, • the taxpayer's participation directly, or indirectly through the agency of his adviser, in the plan to increase the value of his shares (including research, meeting company representatives and becoming a substantial shareholder to have a greater say over any future sale process by Nexus) block the proposed takeover of Nexus by another company and contest the subsequent deed of company arrangement proposed by creditors of Nexus, • the taxpayer's use of his own business knowledge and experience (that he had acquired as a senior executive of a global services group of companies which operated in the mining and resources industry) each time he decided to buy Nexus shares in a context where that knowledge and experience of the mining and resources sector was more than most ordinary private investors would have, • the taxpayer acted as a businessperson would by engaging in the previously listed activities; the taxpayer engaged professional advisers; the taxpayer used 'system and organization' in relation to the acquisition of his Nexus shares; his share trading activities were not consistent with a hobby, pastime, private gambling or gaming; and the disposal of his shares was more than a 'mere' realisation of an asset. | Detailed Reasoning - Application to your circumstance: The Commissioner has applied the business indicators from TR 97/11 to your circumstances as follows: Intention Prospect of profit Repetition and regularity Same kind and character of similar businesses in the same industry and organised in a businesslike manner Size and scale Hobby or recreation Significant commercial character In applying the additional indicators for share traders from Case 6297: The Commissioner does not accept that your activity was a business in the relevant income years. The activity does not demonstrate the business indicators nor is considered to be a trading business when applying the indicators from Case 6297. The factors pointing against the existence of a share and cryptocurrency trading business are more significant than the factors pointing in favour. The income arising from your share and cryptocurrency related activity cannot be considered income from isolated profit-making commercial transactions and will not be assessable income under section 15-15 of the ITAA 1997. Your case can also be distinguished from Greig's case for the following reasons: • Your plan to generate income from your share and cryptocurrency activity could not be described as sophisticated. • You have not acquired the shares and cryptocurrency in a systemic fashion. • You do not have any formal training, qualifications or expertise in the industry. • You do not actively participate in increasing the value of your shares (i.e. by becoming a substantial shareholder, etc). • You activity is more consistent with that of an investor. The Commissioner considers that your conduct was more alike to that of an investor than someone carrying on a business. Your aims and methods lacked the scope and complexity of ordinary trade in this line of business and were not undertaken in a business-like manner. The Commissioner does not consider that you were carrying on a business of share and cryptocurrency trading in the relevant years. Therefore, the assets are not trading stock, and the income from their disposal is not assessable under section 6-5 through Division 70 of the ITAA 1997. The Commissioner does not consider that your share and cryptocurrency related activity constitutes an isolated profit-making scheme and therefore cannot be considered statutory income under section 6-10 through section 15-15 of the ITAA 1997. As no part of the proceeds from your transactions are assessable outside of the CGT provisions there will be no reduction of assessable capital gain under section 118-20 of the ITAA 1997. Therefore, your assets were CGT assets under section 108-5 and not revenue assets under another provision. As CGT assets, any losses from your activity were capital in nature and they cannot be claimed as a deduction under section 8-1 of the ITAA 1997. Your capital gains will be included as statutory income under section 6-10 through section 102-5 of the ITAA 1997. Your capital losses can be offset against capital gains made that year and in future years through section 102-10 of the ITAA 1997. You should continually reassess this status on an annual basis by considering if your level of activity has changed, and whether the status of your activity has changed to one of a business .

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 repetition and regularity 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, | the size, scale and permanency of the activity, and | whether the activity is better described as a hobby, a form of recreation or a sporting activity. | 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, and | the volume of the taxpayer's operation and the amount of capital employed by them. | repetition and regularity in the buying and selling of shares, | 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 receipts' basis, and | whether the taxpayer is engaged in another full-time occupation. | the buying and selling of shares was not regular or routine | there appeared to have been very little in the way of a plan, although a written plan was produced belatedly, and | the Tribunal added that very little appeared to have been done in terms of setting budgets and targets, and that the trading and the background research was simple and unsophisticated. | You previously did not declare the income in your tax returns as business income and instead treated your activity as investing. | Although you may have an intention to engage in business, this is not sufficient in itself. There needs to be activity to support this. | Your share and cryptocurrency activity made losses in the 20XX income year. The profit that you did make in the 20XX income year was not significant. | Your activity has not demonstrated any consistent turnover. | The nature of your activity does have a purpose of profit-making, however, you appear to have made an overall loss from your activity. | On an objective analysis of the above factors, your activities appear to have a low prospect of profit. | You do not place trades every single day. There is no holding pattern identified from your share and cryptocurrency activity. | You typically hold shares for less than 12 months however you have held onto some assets for longer than 12 months. | You are not considered to have a high level of share transactions and your activity is not in line with the trades that would be expected of a person conducting a share or cryptocurrency trading business. | You have conducted some self-directed research into trading and how to conduct your activity. | You do not have an office in relation to your share and cryptocurrency activity. You are engaged in full-time employment outside of your activity. | There is a lack of sophistication involved as you have had no formal training or assistance in the activity. | There is no system or plan for which assets you hold on capital account or on a revenue account. You have advised that you hold some assets longer than others depending on volatility and the type of asset. | You have a system for profits and stop-losses as well as how much risk you take on each transaction. You keep records, however, you do not organise your activity in a way that trader carrying on a business would (e.g. business plan, trading stock inventory, profit and loss statements, capital vs revenue accounts). | Your activities do not appear to be operated in a business-like manner similar to other share and cryptocurrency trading businesses. | You employed approximately $X into your activity during the 20XX income year and approximately $X during the 20XX income year. You made X transactions in the 20XX income year and X transactions in the 20XX income year. | Although these amounts are not insignificant, the size and scale of your activity is relatively small in comparison to what would be expected for a trading business. | Your activity does not have the size, scale and permanency of a commercially viable trading business. | You started the share activity with the intention to make a profit. Your activities are not considered to be a hobby. | In considering all of the business indicators, the activity does not appear to be carried on in a commercial manner similar to other share and cryptocurrency trading businesses. | the nature of the activities have a profit-making purpose, | your activity is not complex or substantial in magnitude, | the activity can't be described as being sophisticated or conducted in a similar manner to other share or cryptocurrency trading businesses, | profits or losses have not arisen from a discernible pattern of trading, | the volume of your activity is relatively low and the amount of capital employed is moderate, | there is no discernible pattern or system demonstrated by your activity you do not appear to buy and sell shares at regular intervals and the frequency of your trades is sporadic, | you made an overall loss from your activity in the 20XX income year and a small profit in the 20XX income year, | you do not have a business plan, however, you do set profit and stop-loss targets and maintain some records, | you do not maintain a physical office related to your share and cryptocurrency activity, | you account for transactions on a gross receipts' basis, and | you are engaged in a full-time occupation unrelated to your share and cryptocurrency activity.