Edited version of private advice

Authorisation Number: 1051781054252

Date of advice: 20 November 2020

Ruling

Subject: Share trading - am I in business?

Question 1

Are you carrying on the business of share trading?

Answer 1

Yes. You meet the relevant factors contained in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production?Further information about carrying on a business can be found by searching 'QC 31733' and 'QC 52205'on ato.gov.au

Question 2

Are your home office expenses (internet and electricity) deductible?

Answer 2

Yes. However, the expenses must be apportioned to account for both work and private purposes. Further information about home office expenses can be found by searching ' QC 23624' and 'QC 31977' on ato.gov.au

Question 3

Are your home occupancy expenses such as rent, mortgage interest, insurance and rates deductible?

Answer 3

No. Your occupancy expenses are not deductible, as you do not meet the requirements detailed in Taxation Ruling TR 93/30.You allotted your living room area as your office. To be eligible to claim a deduction for occupancy expenses you must pass the interest deductibility test.

To pass the interest deductibility test, the area you have set aside in your home for your business must have the character of a place of business.

Indicators that an area of your home has the character of a place of business include that it's:

•   clearly identifiable as a place of business, for example, you have a sign identifying your business at the front of your house

•   not readily suitable or adaptable for private or domestic purposes

•   used exclusively or almost exclusively for carrying on your business

•   used regularly for visits by your clients.

Further information about home office expenses can be found by searching 'QC 23624' and 'QC 59276' on ato.gov.au

Question 4

Are your expenses for subscriptions to business publications deductible?

Answer 4

Yes. Subscriptions to technical, scientific, trade, business or professional journals, information services, newspapers and magazines are deductible, provided the subscriptions relate to the production of your assessable income. Further information about home office expenses can be found by searching QC 31988' and 'QC 33867' on ato.gov.au

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 May 20XX

Relevant facts and circumstances

You participate in share-trading activities.

You commenced with an investment of $XX

As of 20XX, your holding valuation was $X with X holdings and X buying transactions.

There were no shares sold nor dividends received for the financial year 20XX.

As of 20XX, you have $XX invested in your share trading activities.

You made the trading transactions using ABC online platform.

Your share trading activities have proven profitable since commencement.

The average buying transaction involved XX shares with an average cost of $XX. The average selling transaction involved XX shares with an average selling price of $XX. The average time that shares are held before being offloaded is X days.

You are currently employed. You work XX hours per week in this role.

You spend XX hours on your share trading activity per week.

You allotted your living room area as your office.

You have a laptop with Windows Office and antivirus installed and 110GB of Internet data per month to use.

You have industry subscription. These financial publications are your tools to get insights on the fundamentals and technical overview of the market vital for your day today trading activity.

You keep detailed records of your trading activities.

You have completed online share trading courses. You also educated yourself by joining webinars, subscribing to trading podcasts and You Tube videos. You've also read books on market analysis and trading.

Your stop loss is set up at 10% below your entry price, but it is kept in your notes, it is not automatically set in your trading platform. If technical analysis and negative updates is evident, you sell to keep losses at below 10%. And if market correction is looming, tour strategy is to cash up to 100% depending on how bad the market condition is and then wait for the right moment to go back in.

You intend to take an early retirement. Your target is X years from now, but you are planning to work part time in X years. This will give you time to hone your skills in trading while having money to support your living expenses and have a viable source of income when you retire.

As you will have more time to do research on the shares you are interested in, your share trading activity and number of trades will increase.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 section 8-1