Private ruling: Am I in business? - share investing versus share trading
Date of advice: 30 October 2025
Published: 15 December 2025
Ruling period: For the income period ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you carrying on a business for tax purposes of share trading? | A1: No. | Q2: Can you claim a deduction for your working from home expenses relating to your share trading? | A2: No.

Relevant facts and circumstances: You spend X hours per day reviewing the share trading market and analysing potential investments, with up to approximately X hours per week spent on activities. During the YYYY, you were employed full time as a X for X. You resigned from this role on DDMMYYYY. You have been involved in share trading activities for approximately the last X years on and off, however more actively in the relevant income year. During the relevant income year you conducted X share transactions including: • X buy transactions for a quantity of X shares valued at $X • X sell transactions for a quantity of X shares valued at $X. In order to make decisions on when to buy or hold shares you follow market news, trader forum and communities, stock movements and technical analysis of trading indicators. You study charts, momentum and market trends. You have no formal qualifications in this area however you have completed online trading courses and learnt from peers and online. You completed the X course in DDMMYYYY. You have estimated your net profit from trading to be $X. You maintain a spreadsheet of your turnover and transactions for record keeping purposes. You have purchased a laptop with accessories to use for trading purposes. You do not have a formal business plan or written strategy. Your YYYY turnover exceeded approximately $X.

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 995-1 | Income Tax Assessment Act 1997 section 102-5 | Income Tax Assessment Act 1997 section 102-10 | Income Tax Assessment Act 1997 Division 40

Reasons for decision: Summary: Your share trading activities would be regarded as a share investor with the capital gains tax (CGT) provisions applying to your gains and losses. | Detailed Reasoning - Detailed reasoning: There are three possible scenarios as to how gains and losses from share trading activities can be treated for income tax purposes. These scenarios and their consequences are as follows: | Detailed Reasoning - 1. Business income: In this scenario your share trading activities would be considered to constitute the carrying on of a business for tax purposes. Your shares would be regarded as trading stock and any gains or losses would be included in your assessable income. Your business income would be ordinary income and assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997), while your expenses would be deductible under section 8-1 of the ITAA 1997. | Detailed Reasoning - 2. Investment income: In this situation your share trading activities would be regarded as investing. Your shares would be considered CGT assets. Any gains resulting from the disposal of shares would be income as a capital gain. Any losses sustained on the disposal of your shares would be a capital loss. Your income would be statutory income and assessable under section 102-5 of the ITAA 1997, while a loss would be deductible under section 102-10 of the ITAA 1997. | Detailed Reasoning - 3. Income from a profit making undertaking or scheme: Your share trading activities would be considered to be a profit making undertaking or scheme if you are purchasing shares for the sole purpose of realising short term capital gains, but your activities fall short of carrying on a business for tax purposes. You would sell shares in the very short term, and generally you would not receive dividends as your holding periods are usually too short to coincide with a dividend payment. Your income would be ordinary income and assessable under section 6-5 of the ITAA 1997. Any losses that you incur on disposal of your shares would be deductible under section 8-1 of the ITAA 1997. You cannot treat your shares as trading stock, and you can only make deductions for expenses that relate directly to a share transaction. To determine which of these treatments applies to your situation it is necessary to make a determination of whether or not your share trading activities amount to the carrying on of a business for tax purposes. If a business is not being carried on, it then needs to be determined whether your shares should be accounted for under scenario 2 or scenario 3, as each result in a different tax treatment. | Detailed Reasoning - Carrying on a business of share trading: 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. To determine which of these treatments applies to your situation it is necessary to make a determination of whether or not your share trading activities amount to the carrying on of a business. Section 995-1 of the ITAA 1997 defines a 'business' to include any profession, trade, employment, vocation or calling but does not include occupation as an employee. This definition, however, 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. The Commissioners view on carrying on a business is set out in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? Whilst TR 97/11 considers the carrying on of a business of primary production, the principles applied in it have been applied by the courts in determining whether a business of share trading is carried on. The question of whether you were engaged in share trading is essentially based on the facts of your 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: (a) the nature of the activities and whether they have the purpose of profit-making (b) the complexity and magnitude of the undertaking (c) an intention to engage in trade regularly, routinely, or systematically (d) operating in a business-like manner and the degree of sophistication involved (e) whether any profit or loss is regarded as arising from a discernible pattern of trading (f) the volume of the taxpayer's operation and the amount of capital employed by them. and more particularly 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 receipts' basis • whether the taxpayer is engaged in another full-time occupation. In a more recent case Hartley v FCT (2013) AATA 601 ( Hartley case ) the Administrative Appeals Tribunal (AAT however now known as the Administrative Review 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 the Hartley case the taxpayer was during relevant times a full-time council employee. According to the taxpayer, he had been actively involved in the share market for many years, which occupied about 15 hours of his time per week. He also claimed he had an arrangement with his employer where he could trade during business hours and then make up any time after hours. For the relevant tax years (the financial years ended 30 June 2010 and 30 June 2011), the taxpayer lodged tax returns claiming significant deductions on the basis that he was 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 AAT 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 the 'matter was finely balanced', the AAT 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 AAT included the following: • 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; the AAT 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. 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. The overall impression gained is that you will be in the business of trading shares however you also show that you are a share investor. Therefore you can have separate portfolios for investment purposes and for share trading and each will be treated differently. To operate as a share trader and also as an investor you should ensure the two activities are kept separated and you keep sufficient records to identify how you treat each activity. Your income from your share trading business is assessable as ordinary income under section 6-5 of the ITAA 1997, while your deductions are allowable under section 8-1 of the ITAA 1997. | Detailed Reasoning - Application to your circumstances: In your case even though you devote regular time to your share trading activities in making your investment decisions, the size, repetition and regularity in the frequency of your trades is low in number with X buy and sell transactions during the income year. This is still a very low frequency and does not carry significant weight to support that a business of share trading for tax purposes is being carried on. You have no formal qualifications in this area, however your decisions on when to buy or hold shares still follow market news, trader forums & communities, stock movements and technical analysis of trading trends. You have also learnt online and completed a training course. You spend devoted time weekly to studying charts, momentum and consider market trends. You do not maintain any formal business plan or written strategy for your investments and you maintain a spreadsheet of your transactions for record keeping purposes. So although you have shown intention for the goal of making profit with your net profit of $X to date, your activities are not commercial in nature in a business-like manner as the bar for a share trading business is very high. The facts in your case would need to demonstrate a more complex and sophisticated trading strategy for the purposes of carrying on a business for tax purposes. Your share trading activities would be regarded as investing or that of a sophisticated share investor. Your shares would be considered CGT assets. Any gains resulting from the disposal of your shares would be income as a capital gain under section 102-5 of the ITAA 1997. Any losses sustained on the disposal of your shares would be a capital loss under section 102-10 of the ITAA 1997. | Summary: You are not eligible to claim working from home deductions under section 8-1 of the ITAA 1997. However you have purchased a laptop with accessories to be used for trading purposes, so a deduction for decline in value of a depreciating asset is available where the asset is used for a taxable purpose. | Detailed Reasoning - Detailed reasoning: Section 8-1 of the ITAA 1997 allows a deduction for all expenses to the extent they are incurred in gaining or producing assessable income except where the outgoings are of a capital or capital in nature, private or domestic nature, relate to earning of exempt income or a provision prevents you from deducting it. For expenditure to form an allowable deduction, the expenditure must be incidental and relevant in the sense of having the essential character of expenditure incurred in the course of gaining or producing assessable income. There must be a close and sufficient connection between the expenses and the operations or activities which gain or produce the assessable income (refer to Federal Commissioner of Taxation v Cooper (1991) FCR 177; 91 ATC 4396; (1991) 21 ATR 1616). Broadly, 'capital or capital in nature' refers to expense items that are not regular or recurrent but, rather, are one-off expenditures that can be expected to have an enduring or lasting benefit. The cost of a depreciating asset that has a limited effective life such as a laptop can be claimed as a decline in value deduction. Apportionment is required if the asset is used for both the purpose of producing assessable income and other private purposes. Expenses incurred in earning income from dividends and distributions may include management fees and fees for investment advice relating to changes in the mix of your investments, interest you pay on money you borrow to buy shares or similar investments, or costs relating to managing your investments such as travel and buying specialist investment journals and subscriptions. If you borrow money to buy assets for both private use and income producing investments, you can claim only the portion of the interest expenses relating to the income producing assets. Expenses specifically denied include financial advice you receive from someone who isn't either a tax agent with a current Tax Practitioners Board registration and a qualified tax relevant provider with a current Australian Securities and Investments Commission registration, some interest expenses where you borrow money under a capital protected product or borrowing, brokerage fees and other transaction costs. You also can't claim brokerage fees and other transaction costs To be eligible to claim working from home expenses, you must: • be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls, • incur additional running expenses as a result of working from home, and • have records that show you incur these expenses. | Detailed Reasoning - Application to your circumstances: In your case a share investor is not an employee working from home to fulfil your employment duties, so you are not eligible to claim working from home deductions under section 8-1 of the ITAA 1997. However you have purchased a laptop with accessories to be used for trading purposes, so a deduction for decline in value of an asset used for a taxable purpose would be available under Division 40 of the ITAA 1997.