Private ruling: Carrying on a business
Date of advice: 22 September 2025
Published: 10 November 2025
Ruling period: Income year ended 30 June 20YY | Income year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Was the Taxpayer carrying on a business of trading in shares in the income year ended 30 June 20YY? | A1: No. | Q2: Was the Taxpayer carrying on a business of trading in shares and CFDs in the income year ended 30 June 20YY? | A2: No. | Q3: If the answer to Questions 1 and/or 2 is no, are the Taxpayer's: a. profits from disposing of shares in the 20YY and 20YY income years and CFDs in the 20YY income year assessable under section 6-5; and b. losses from disposing of shares in the 20YY and 20YY income years and CFDs in the 20YY income year deductible under section 8-1? | A3: Yes.

Relevant facts and circumstances: Background The Taxpayer has been undertaking share trading activities since X XX XXXX. The Commissioner issued a private ruling concluding that the Taxpayer was carrying on a business of share trading in the income years ended 30 June 20YY and 30 June 20YY. The following facts were relevant in the Commissioner ruling that the Taxpayer was carrying on a business of share trading in the income years ended 30 June 20YY and 30 June 20YY: a. For the income year ended 30 June 20YY, the Taxpayer made a total of XXX trades. b. For the income year ended 30 June 20YY, the Taxpayer made a total of XXX trades. c. The Taxpayer spent several hours each day reviewing the daily news before the Australian market opened. Once the market opened, the Taxpayer would place and monitor trades constantly. d. The Taxpayer carried out extensive research and had subscriptions to various publications. e. The Taxpayer's strategy included trading XX shares as a hedge against more XX, with an aim to make a short term profit. f. Share trading activities were funded by a margin loan. g. Shares were held for approximately XXX days and XX days in the 20YY and 20YY income years respectively. No shares that were sold in either of these income years was held for greater than 12 months. The Commissioner issued a private ruling concluding that the Taxpayer was not carrying on a business of share trading in the income year ended 30 June 20YY. The following facts were relevant in the Commissioner ruling that the Taxpayer was not carrying on a business of share trading in the income year ended 30 June 20YY: a. After significant losses in the 20XX income year, the Taxpayer began taking steps to wind down their share trading business. b. The Taxpayer purchased shares in XX and XX 20YY that were not sold by the end of the income year. c. For the income year ended 30 June 20YY, the Taxpayer made a total of XX trades. d. All of the Taxpayer's trades in the income year ended 30 June 20YY occurred between XX 20YY and XX 20YY. The Commissioner issued a private ruling concluding that the Taxpayer was not carrying on a business of share trading in the income year ended 30 June 20YY. The following facts were relevant in the Commissioner ruling that the Taxpayer was not carrying on a business of share trading in the income year ended 30 June 20YY: a. The period for which the Taxpayer held shares extended. Some shares purchased in the income year ended 30 June 20YY were not sold until June 20YY. b. For the income year ended 30 June 20YY, the Taxpayer made a total of XX trades. Activities in the 20YY and 20YY income years In the income year ended 30 June 20YY, the Taxpayer continued their share trading activities, making a net profit. The following points can be made about the Taxpayer's share trading activities in the income year ended 30 June 20YY: a. The Taxpayer made a total of XX trades. b. XX of these trades occurred between XX and XX of 20YY. All other trades occurred sporadically throughout the income year. c. Three trades related to the sale of shares that were purchased in previous income years. d. The holding period for shares purchased in the income year ranged from one day to four months. e. The Taxpayer traded in a total of X different companies. In the income year ended 30 June 20YY, the Taxpayer continued their share trading activities, making a net loss. The following points can be made about the Taxpayer's share trading activities in the income year ended 30 June 20YY: a. The Taxpayer made a total of XX trades. b. Only XX trades occurred from XX 2024 until XX XX 2025. XX of these trades occurred in XX 20YY. c. The Taxpayer traded in a total of XX different companies. The Taxpayer also expanded their activities to include contracts for differences ('CFD positions'). During the income year ended 30 June 20YY, the Taxpayer entered and closed approximately XXX CFD positions. By XX XXXX, the Taxpayer had closed out all of their CFD positions and does not intend to take any new CFD positions. Between XX XXXX and XX XXXX, the Taxpayer made a net loss from their CFD positions. During both the income years ended 30 June 20YY and 30 June 20YY, the Taxpayer: a. maintained subscriptions to various publications b. financed share trading activities via a margin loan; c. spent several hours each day reviewing daily news before the Australian market opened; and d. was the director of a private company that operates XXX and is the full-time manager of those XXX.

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

Reasons for decision: Summary: Having regard to the scale, repetition, organisation and purpose of the Taxpayer's share trading activities, the Taxpayer was not carrying on a business of trading in shares during the income year ended 30 June 20YY. | Detailed Reasoning - Detailed reasoning: Whether or not you are carrying on a business is a question of fact and degree that is determined on a year to year basis. Although the Taxpayer was not carrying on a business of trading in shares in the income years ended 30 June 20YY and 30 June 20YY, the Taxpayer is not prevented from carrying on a business of trading in shares in later years. Although it is related to primary production, Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? ('TR 97/11') outlines the relevant indicators when determining whether a business is being carried on. While there are no hard and fast rules in determining whether a taxpayer's activities amount to the carrying on of a business, cases that have considered the question of whether a business is being carried on have referred to the following indicators: • 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; • 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. In addition, cases that have considered whether someone is carrying on a business of share trading have considered the following indicators: [1] • 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; • whether the taxpayer is engaged in another full time profession; and • whether shares were acquired for the purposes of obtaining a dividend yield and/or long-term growth. No one indicator is determinative, and there may be overlap across some of the indicators. Each of these indicators is considered with respect to the Taxpayer's share trading activities below. | Detailed Reasoning - Significant commercial purpose or character?: The Taxpayer sought to make short term profits through trading in shares, as shares were most held for a matter of days. The Taxpayer was not investing for dividends or long term growth. The Taxpayer's trades occurred on market, to and from unrelated parties. While the Taxpayer's activities were not complex, the turnover of the Taxpayer's activities was substantial. It is therefore accepted that the Taxpayer's activities had a commercial purpose or character. Whether this purpose or character is significant will depend on the surrounding circumstances of the Taxpayer's share trading activities. Paragraph 29 of TR 97/11 states that whether an activity has significant commercial purpose or character is closely linked to the other indicators, and is a generalisation drawn from the interaction of the other indicators. In particular, it is linked to the size and scale of the activity, the repetition and regularity of the activity, and the profit indicators. A way of establishing that there is a significant commercial purpose or character is to compare the activities with those of a taxpayer who is carrying on a similar activity that is a business. Paragraph 30 of TR 97/11 outlines some circumstances that may assist in determining whether there is a significant commercial purpose or character: • whether a business plan has been drawn up • whether the taxpayer is an expert, and if not, whether the taxpayer has sought advice and obtained technical literature on the activity which the taxpayer intends to carry on • whether the taxpayer has conducted research into the activity While the significance of the commercial purpose or character of the Taxpayer's activities is discussed below in the other indicators, with respect to the circumstances in paragraph 30 of TR 97/11, the following points can be noted: • no business plan has been drawn up; • while the Taxpayer has subscriptions to various publications, these publications are not technical literature on share trading; and • the Taxpayer reviews the daily news and carries out extensive research. | Detailed Reasoning - Does the taxpayer have more than a mere intention to engage in business?: A mere intention to engage in business is not enough, there must be activity. Brennan J in Inglis v Federal Commissioner of Taxation [2] stated 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.' [3] Here, the Taxpayer has gone beyond a mere intention to conduct share trading activities and has in fact conducted the activities. The extent of the activity noted by Brennan J is discussed below in the other indicators. | Detailed Reasoning - Is there an intention to make a profit or a genuine belief that a profit will be made?: The Taxpayer made a profit during the income year ended 30 June 20YY from their share trading activities. It is accepted that the Taxpayer had an intention to make a profit or a genuine belief that a profit would be made from conducting share trading activities. | Detailed Reasoning - Is there repetition and regularity in the activity?: As noted in paragraph 55 of TR 97/11, the repetition of activities over a period of time on a regular basis is often a feature of a business being carried on. The higher the volume and frequency of trades, the more likely it is that a business of share trading is being carried on. During the 20YY income year, the Taxpayer made a total of XX trades. XX of these trades occurred between XX and XX 20YY, with XX occurring between XX XX 20YY and XX XX 20YY. That is, nearly 1/3 of the Taxpayer's activities for the income year occurred in a period of nine days, and over half of the Taxpayer's activities occurred in a period of two months. All other trades occurred sporadically throughout the income year. There was no share trading activity for large parts of the income year, including periods from X XX 20YY to X XX 20YY, XX XX 20YY to X XX 20YY, and XX XX 20YY to XX XX 20YY. Although there was a degree of repetition and regularity in the Taxpayer's share trading activities, this repetition and regularity was limited to small periods during the income year. In Hartley v. Federal Commissioner of Taxation , [4] the taxpayer did not purchase any shares in seven of the 12 months of the income year, and did not sell any shares in five of the 12 months of the income year. Deputy President Deutsch noted that this lack of regular or routine trading tended to point to the taxpayer in that case being involved in a series of individual transactions on a speculative basis rather than as a share trader, and pointed against the taxpayer having conducted a share trading business. [5] Similarly, when the extent of the repetition and regularity of the Taxpayer's share trading activities is considered across the income year, this indicator does not support a conclusion that a business was being carried on. | Detailed Reasoning - Is the activity of the same kind and carried on in a similar way to that of the ordinary trade?: Paragraph 63 of TR 97/11 states that 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. The Taxpayer had no business plan of formal trading strategy and did not utilise additional resources or decision-making tools in conducting their activities. Furthermore, the Taxpayer was the director of a private company that operates X and is the full-time manager of those X. The Taxpayer's activities did not occur for large parts of the income year. It is unclear whether this is because the Taxpayer lacked sufficient time due to their full-time management of X. Whether or not this is the case, it is expected that the activities would be carried on with greater regularity without significant periods of inactivity if they were carried on in a similar way to other share trading businesses. Accordingly, this indicator does not support a conclusion that the Taxpayer was carrying on a business of trading in shares. | Detailed Reasoning - Is the activity organised and carried on in a businesslike manner?: Paragraph 68 of TR 97/11 states that a business is characteristically carried on in a systematic and organised manner rather than on an ad hoc basis. For a business of trading in shares, this might include the taxpayer setting up an ABN, writing and maintaining a business plan or trading strategy, seeking expert advice, and ongoing education, formal or otherwise. However, the AAT has noted that the concept of operating in a businesslike manner is becoming increasingly fluid, and to be careful of stereotypes with how a business might operate. [6] While the Taxpayer has kept records of their share trading activities and had a margin loan facility, there is nothing else that indicates the activities are organised in a businesslike manner. The Taxpayer does not have an ABN for the share trading activities and does not have a business plan in place. Nor does the Taxpayer have a formal strategy for their share trading activities. The Taxpayer's activities are more appropriately described as being carried on in an ad hoc manner. This is supported by the ad hoc nature of when the activities occur, discussed above under repetition and regularity of the activity. Although the concept of operating in a businesslike manner is fluid, there is little to suggest the Taxpayer had any system or organisation in carrying out their share trading activities. Accordingly, this indicator does not support a conclusion that the Taxpayer was carrying on a business of trading in shares. | Detailed Reasoning - What is the size, scale and permanency of the activity?: Paragraph 77 of TR 97/11 states that the larger the size and scale of the activity, the more likely it will be that a taxpayer is carrying on a business. However, this is not determinative, and a taxpayer may carry on a business in a small way. While a taxpayer may carry on a business in a small way, the smaller the scale of the activity, the more important the other indicators become when deciding whether a taxpayer is carrying on a business. [7] As noted above, the Taxpayer made a total of XX trades during the income year that included buys totalling $X and sales totalling $X. Both the size and scale of the Taxpayer's share trading activities increased in the income year ended 30 June 20YY when compared to the two preceding income years. This is evident from both the turnover and total number of trades. While it is clear that the size and scale of the Taxpayer's share trading activities have increased, the size and scale of the Taxpayer's activities are still relatively small. When the Taxpayer's activities that occurred outside of March and April 20YY are examined, the size and scale of the activities are particularly small. In addition, and similar to the two preceding income years, the Taxpayer only traded shares in X different companies during the income year ended 30 June 20YY. The Taxpayer's activities only included basic buy and sell trades. These facts indicate that the size and scale of the Taxpayer's activities are insufficient to be carrying on a business. Accordingly, this indicator does not support a conclusion that the Taxpayer was carrying on a business of trading in shares. | Detailed Reasoning - Is the activity better described as a hobby?: Paragraph 86 of TR 97/11 states that the pursuit of a hobby is not the carrying on of a business for taxation purposes. Paragraph 87 of TR 97/11 outlines some indicators of when activities may be a hobby: • it is evidence that the taxpayer does not intend to make a profit from the activity; • losses are incurred because the activity is motivated by personal pleasure and not to make a profit and there is no plan in place to show to a profit can be made; • the transaction is isolated and there is no repetition or regularity of sales; • any activity is not carried on in the same manner as a normal, ordinary business activity; • there is no system to allow a profit to be produced in the conduct of the activity; • the activity is carried on a small scale; and • there is an intention by the taxpayer to carry on a hobby rather than a business. Despite the Taxpayer's activities not being carried out in a systematic manner with limited repetition and regularity, and on a small scale, the Taxpayer's share trading activities are not better described as a hobby. It is accepted that the Taxpayer intended to make a profit, and did in fact make a profit, from the activities during the income year ended 30 June 20YY. When this is viewed alongside the commercial nature of trading in shares, the activities are not better described as a hobby. Accordingly, this indicator supports a conclusion that the Taxpayer was carrying on a business of trading in shares. | Detailed Reasoning - Specific share trading indicators: In considering specific share trading indicators that have been considered in previous cases, the repetition, regularity, and turnover of the Taxpayer's activities have been discussed under other indicators. It has also been noted under other indicators that while the Taxpayer keeps records, there is no business plan or strategy to which the Taxpayer is operating. On the facts, the Taxpayer is not maintaining an office specifically for the purposes of their share trading activities. The Taxpayer is engaged in another full time profession. Apart from two trades, it is clear that the shares acquired by the Taxpayer were not for the purposes of obtaining a dividend yield and/or long-term growth as they were mostly held for a number of days or weeks. | Detailed Reasoning - Conclusion: In weighing up the indicators outlined in TR 97/11 and indicators specific to share trading, the Taxpayer was not carrying on a business of trading in shares in the income year ended 30 June 20YY. While the Taxpayer's activities had a purpose of profit and cannot be described as a hobby, many of the other indicators that a business is being carried on were not present in the income year ended 30 June 20YY. Most notably, the Taxpayer's activities lacked the repetition and regularity, organisation and systematic manner, and size and scale of someone who carrying on a business of trading in shares. Indicators specific to share trading also support the conclusion that the Taxpayer was not carrying on a business of trading in shares. Besides not acquiring shares for the purposes of obtaining a dividend yield and/or long-term growth, all other indicators indicate that no business was being carried on. | Summary: The Taxpayer's share and CFD trading activities during the income year ended 30 June 20YY have been considered against the same indicators that were considered in determining whether the Taxpayer was carrying on a business of trading in shares in the income year ended 30 June 20YY in Question 1 of this Document. Having regard to the scale, repetition, organisation and purpose of the Taxpayer's share and CFD trading activities, the Taxpayer was not carrying on a business of trading in shares during the income year ended 30 June 20YY. | Detailed Reasoning - Significant commercial purpose or character?: Similar to the Taxpayer's share trading activities in the income year ended 30 June 20YY, the Taxpayer's share and CFD trading activities in the income year ended 30 June 20YY were undertaken with an aim to make short term profits. The Taxpayer was not investing for dividends or long term growth. The Taxpayer's share and CFD trading activities occurred on market, to and from unrelated parties. While the Taxpayer's activities were not complex, the turnover of the Taxpayer's activities was substantial. It is therefore accepted that the Taxpayer's activities had a commercial purpose or character. Whether this purpose or character is significant will depend on the surrounding circumstances of the Taxpayer's share trading activities. Paragraph 29 of TR 97/11 states that whether an activity has significant commercial purpose or character is closely linked to the other indicators, and is a generalisation drawn from the interaction of the other indicators. In particular, it is linked to the size and scale of the activity, the repetition and regularity of the activity, and the profit indicators. A way of establishing that there is a significant commercial purpose or character is to compare the activities with those of a taxpayer who is carrying on a similar activity that is a business. Paragraph 30 of TR 97/11 outlines some circumstances that may assist in determining whether there is a significant commercial purpose or character: • whether a business plan has been drawn up • whether the taxpayer is an expert, and if not, whether the taxpayer has sought advice and obtained technical literature on the activity which the taxpayer intends to carry on; and • whether the taxpayer has conducted research into the activity. While the significance of the commercial purpose or character of the Taxpayer's activities is discussed below in the other indicators, with respect to the circumstances in paragraph 30 of TR 97/11, the following points can be noted: • no business plan has been drawn up; • while the Taxpayer has subscriptions to various publications, these publications are not technical literature on share trading; and • the Taxpayer reviews the daily news and carries out extensive research. | Detailed Reasoning - Does the taxpayer have more than a mere intention to engage in business?: Similar to the income year ended 30 June 20YY, the Taxpayer has gone beyond a mere intention to conduct share and CFD trading activities and has in fact conducted the activities in the income year ended 30 June 20YY. | Detailed Reasoning - Is there an intention to make a profit or a genuine belief that a profit will be made?: Although the Taxpayer made a loss during the income year ended 30 June 20YY from their share and CFD trading activities, it is accepted that the Taxpayer had an intention to make a profit or a genuine belief that a profit would be made from the activities. | Detailed Reasoning - Is there repetition and regularity in the activity?: During the 20YY income year, the Taxpayer made a total of XX share trades. XX of these trades occurred between X XX 20YY and X XX 20YY. From XX XX 20YY until XX XX 20YY, the Taxpayer made a total of XX trades. XX of these trades occurred in XX 20YY. The remaining two trades occurred on XX XX 20YY and X XX 20YY. Similar to the income year ended 30 June 20YY, there is a degree of repetition and regularity in the Taxpayer's share trading activities. However, activity is concentrated in small periods throughout the income year, with significant periods of limited or no activity. A similar observation can be made about the Taxpayer's CFD trading activities. All of the Taxpayer's CFD trading activities occurred between XX XX 20YY and XX XX 20YY, which includes a period of no activity from XX XX 20YY until X XX 20YY. This points towards the Taxpayer's activities being carried on in a speculative and ad hoc manner, and does not support a conclusion that a business was being carried on. | Detailed Reasoning - Is the activity of the same kind and carried on in a similar way to that of the ordinary trade?: Paragraph 63 of TR 97/11 states that 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. The Taxpayer had no business plan of formal trading strategy and did not utilise additional resources or decision-making tools in conducting their activities. Furthermore, the Taxpayer was the director of a private company that operates X and is the full-time manager of those X. The Taxpayer's activities did not occur for large parts of the income year. It is unclear whether this is because the Taxpayer lacked sufficient time due to their full-time management of X. Whether or not this is the case, it is expected that the activities would be carried on with greater regularity without significant periods of inactivity if they were carried on in a similar way to other share trading businesses. Accordingly, this indicator does not support a conclusion that the Taxpayer was carrying on a business of trading in shares and CFDs. | Detailed Reasoning - Is the activity organised and carried on in a businesslike manner?: Paragraph 68 of TR 97/11 states that a business is characteristically carried on in a systematic and organised manner rather than on an ad hoc basis. For a business of trading in shares, this might include the taxpayer setting up an ABN, writing and maintaining a business plan or trading strategy, seeking expert advice, and ongoing education, formal or otherwise. However, the AAT has noted that the concept of operating in a businesslike manner is becoming increasingly fluid, and to be careful of stereotypes with how a business might operate. While the Taxpayer has kept records of their share trading activities and had a margin loan facility, there is nothing else that indicates the activities are organised in a businesslike manner. The Taxpayer does not have an ABN for the share trading activities and does not have a business plan in place. Nor does the Taxpayer have a formal strategy for their share trading activities. The Taxpayer's activities are more appropriately described as being carried on in an ad hoc manner. This is supported by the ad hoc nature of when the activities occur, discussed above under repetition and regularity of the activity. Although the concept of operating in a businesslike manner is fluid, there is little to suggest the Taxpayer had any system or organisation in carrying out their share trading activities. | Detailed Reasoning - What is the size, scale and permanency of the activity?: Paragraph 77 of TR 97/11 states that the larger the size and scale of the activity, the more likely it will be that a taxpayer is carrying on a business. However, this is not determinative, and a taxpayer may carry on a business in a small way. While a taxpayer may carry on a business in a small way, the smaller the scale of the activity, the more important the other indicators become when deciding whether a taxpayer is carrying on a business. [8] As noted above, the Taxpayer made a total of XX trades in shares during the income year that included buys totalling $X and sales totalling $X. For CFDs, the Taxpayer entered and closed XXX positions, using deposits of $X. The size and scale of the Taxpayer's activities increased in the income year ended 30 June 20YY when compared to the income year ended 30 June 20YY. This is evident from both the turnover and total number of trades. Although the size and scale of the Taxpayer's activities during certain periods of the income year are nil, it is undeniable that the size and scale of the Taxpayer's activities are substantial. This indicator supports a conclusion that the Taxpayer was carrying on a business of trading in shares and CFDs. | Detailed Reasoning - Is the activity better described as a hobby?: Despite the Taxpayer's activities not being carried out in a systematic manner with limited repetition and regularity, the Taxpayer's share trading activities are not better described as a hobby. It is accepted that the Taxpayer intended to make a profit from the activities during the income year ended 30 June 20YY. When this is viewed alongside the commercial nature of trading in shares and CFDs, the activities are not better described as a hobby. Accordingly, this indicator supports a conclusion that the Taxpayer was carrying on a business of trading in shares. | Detailed Reasoning - Specific share trading indicators: In considering specific share trading indicators that have been considered in previous cases, the repetition, regularity, and turnover of the Taxpayer's activities have been discussed under other indicators. It has also been noted under other indicators that while the Taxpayer keeps records, there is no business plan or strategy to which the Taxpayer is operating. On the facts, the Taxpayer is not maintaining an office specifically for the purposes of their share trading activities. The Taxpayer is engaged in another full time profession. It is clear that the shares acquired and CFDs entered into by the Taxpayer were not for the purposes of obtaining a dividend yield and/or long-term growth as they were mostly held for a number of days or weeks. | Detailed Reasoning - Conclusion: In weighing up the indicators outlined in TR 97/11 and indicators specific to share trading, the Taxpayer was not carrying on a business of trading in shares and CFDs in the income year ended 30 June 20YY. While the Taxpayer's activities had a purpose of profit and cannot be described as a hobby, many of the other indicators that a business is being carried on were not present in the income year ended 30 June 20YY. Most notably, the Taxpayer's activities lacked the repetition and regularity, and organisation and systematic manner of someone who carrying on a business of trading in shares. While the size and scale of the Taxpayer's activities increased in the income year ended 30 June 20YY, this is insufficient to displace the conclusion that a business was not being carried on. Indicators specific to share trading also support the conclusion that the Taxpayer was not carrying on a business of trading in shares. Besides not acquiring shares for the purposes of obtaining a dividend yield and/or long-term growth, all other indicators indicate that no business was being carried on. | Summary: The Taxpayer's activities in share and CFD trading were commercial transactions that were entered into with the intention to make a profit. Accordingly, gains from these activities will be assessable under section 6-5 and losses will be deductible under section 8-1. | Detailed Reasoning - Detailed reasoning: Subsection 6-5(1) provides that your assessable income includes income according to ordinary concepts. Paragraph 8-1(1)(a) provides that you can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income. In Federal Commissioner of Taxation v. The Myer Emporium Ltd ('Myer') , [9] the High Court stated that a profit will constitute income if the property generating the profit or gain was acquired in a business operation or commercial transaction for the purpose of profit-making by the means of giving rise to the profit. Accordingly, there are two elements that need to be present in order for profit from an isolated transaction to be considered income where a taxpayer is not carrying on a business. These two elements are outlined in paragraph 16 of Taxation Ruling TR 92/3 Income tax: whether profits on isolated transactions are income ('TR 92/3'): a. the intention or purpose of the taxpayer in entering into the transaction was to make a profit or gain; and b. the transaction or operation was entered into, and the profit was made, in the course of carrying on a business or in carrying out a business operation or commercial transaction. Similarly, paragraph 4 of Taxation Ruling TR 92/4 Income tax: whether losses on isolated transactions are deductible ('TR 92/4') states that a loss 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. The Commissioner's view on the tax consequences in relation to trading in CFDs is outlined in Taxation Ruling TR 2015/15 Income tax: tax consequences of financial contracts for differences ('TR 2015/15'). The Commissioner's view in TR 2015/15 is consistent with Myer and TR 92/3, with paragraphs 11 and 12 of TR 2015/15 stating the following: a. A gain from a financial contract for differences will be assessable income under section 6-5 of the ITAA 1997 where the profit was obtained in a business operation or commercial transaction for the purpose of profit making. b. A loss from a financial contract for differences will be an allowable deduction under section 8-1 of the ITAA 1997 where the profit was obtained in a business operation or commercial transaction for the purpose of profit making. As outlined above under questions 1 and 2, it is accepted that the Taxpayer's intention in entering into the share trading and CFD trading activities was to make a profit. In considering whether a transaction or operation is a commercial transaction, paragraph 12 of TR 92/3 states that it is sufficient if the transaction is business or commercial in character. Also outlined above under Questions 1 and 2, it is accepted that the Taxpayer's activities in both the income years ended 30 June 20YY and 30 June 20YY were commercial in character. The Taxpayer aimed to make short term profits from their activities, the scale of the Taxpayer's activities was substantial, and the activities were conducted in an open market. The Taxpayer cannot be said to have been investing for long term capital growth or dividends. As such, the Taxpayer's activities of trading in shares in the income year ended 30 June 20YY and trading in shares and CFDs in the income year ended 30 June 20YY will be commercial transactions. In accordance with TR 92/3, TR 92/4, and TR 2015/15, profit or gain from the Taxpayer's activities will be assessable under section 6-5, and losses from the Taxpayer's activities will be deductible under section 8-1. [1] Williams v. Federal Commissioner of Taxation (1972) 128 CLR 645; [1972] HCA 48; Hartley v. Federal Commissioner of Taxation [2013] AATA 601; (2013) ATC 10-333; AAT Case 6297 (1990) 21 ATR 3747; 90 ATC 621; Greig v. Federal Commissioner of Taxation [2020] FCAFC 25. [2] (1979) 10 ATR 493. [3] Ibid, 496-7. [4] [2013] AATA 601; (2013) ATC 10-333. [5] Ibid, [28]. [6] Re Taxpayer and Federal Commissioner of Taxation [2011] AATA 545; (2011) ATC 1-037, 21. [7] TR 97/11, paragraph 82. [8] TR 97/11, paragraph 82. [9] (1987) 163 CLR 199; [1987] HCA 18.