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Edited version of your written advice
Authorisation Number: 1051278059145
Date of advice: 7 September 2017
Ruling
Subject: Am I in business? Share trading
Question 1
Were you carrying on a business of share trading in the 201Z income year?
Answer
Yes
This ruling applies for the following periods:
Income year ended 30 June 201Z
The scheme commences on:
1 July 201Y
Relevant facts and circumstances
You are a senior engineer.
You started investing in shares in late 201X. Your share trading activity commenced in late 201Y.
You received dividend income from shares issued from your previous company in the 201Z income year, unrelated to your trading activity.
You mainly buy and sell shares either on the same day or within five days of purchase.
You use a trading stock platform. You use your home or work computer for your trading activity.
You do not have a business plan.
You decide which stocks to buy through analysing stocks daily based on charts and volume. You also receive news and announcements through your trading platform.
You spend approximately 1-2 hours each morning conducting research in relation to your activity. You then monitor the share market throughout the trading day. You spend 1 - 4 hours in the evening on share trading forums and analysing charts and trading volumes to identify trading opportunities.
You have created your own research software which informs you of trading opportunities based on predetermined criteria.
You have a stop – loss strategy based on trading volume.
You obtained your knowledge of share trading from books and discussing strategies with other experienced traders on trading forums.
You engaged in a total of XYZ trades in the 201Z income year.
You purchased shares totalling $ ABC in value and the amount of your total sales was $ DEF.
The average value of each of your trades was $ XXXX.
You used your savings to establish your trading portfolio. You later refinanced your mortgage to provide more capital for your activity.
You keep records relating to your share trading in your account and have also created your own spreadsheet into which you enter all of your share transactions. You then use a finance app to calculate your profits and losses.
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
Reasons for decision
We consider that you were engaged in a business of share trading in the 201Z income year as your activity has a significant commercial purpose and character that would be expected of a share trading business.
Further matters for you to consider
This ruling does not consider the status of shares you received from your previous company or other shares held for investment purposes. It is likely these shares would be capital assets. Accordingly, any gains or losses from these shares would be capital gains or capital losses.
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