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Edited version of private advice
Authorisation Number: 1051790788396
Date of advice: 15 January 2021
Ruling
Subject: Share trading
Question
Are you carrying on a business of share trading?
Answer
Yes.
We have applied the relevant factors contained in Taxation Ruling TR 97/11 to your circumstances in making the above determination. Further information about shareholding as an investor or share trading as business can be found by searching 'QC 52205' on ato.gov.au
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
Month X 20XX
Relevant facts and circumstances
You stopped investing in stocks with the purpose of earning dividends in Month X 20XX.
You educate yourself in stock trading from a course that you bought from a company using a method of stock trading, from studying chart patterns and as a member of a group that meets to discuss current trading of stocks.
Your plan is to continue to buy and sell stocks with the intention of making profits and not for dividends and to continue improving your ability through education and research. Your plan is also to chart sectors in the index, select one with the highest consistent up-trend, screen component stocks for earnings and low debt, read weekly charts and select stocks with consistent patterns of swings within uptrend lines, watch swings daily, and enter and exit a trade.
Your daily activities include analysing trends on weekly and daily price charts, save each analysis on the charts, record the results of your analyses in text, place buy and sell orders with your broker, watch price movements, and make sell stop loss orders to save active trades from loss. These charting, analysing and order activities requires you to spend two to four hours on your computer.
From Month X 20XX until Month X 20XX you made a number of transactions of which a number of them were buy transactions and a number of them were sell transactions. The holding period ranged from a number of days to a number of weeks and the average holding period was a number of weeks.
From Month X 20XX until Month X 20XX, you made a number of transactions of which a number of them were buy transactions and a number of them were sell transactions on a number of stocks. The average sell transaction value was $X. The holding period ranged from a number of days to a number of weeks and the average holding period was just a number of weeks.
You have been using your broker since 20XX.
You do not use bank loans or incur debt for trading.
Your trading records are in electronic form with your broker account. Contract data is entered in software on your computer in a room set aside in your home. This software is used to make reports for tax purposes. Your computer records are backed up daily to an external hard drive.
As at Month X 20XX you held $X in cash and $X in stocks totalling $X in your account.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 8-1
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