Edited version of private advice

Authorisation Number: 1051901166211

Date of advice: 25 October 2021

Ruling

Subject: Am I in the business of share trading?

Question 1

Am I in the business of share trading?

Answer

Yes.

You meet several relevant factors contained in Taxation Ruling TR 97/11 for the 20XX financial year. Your income from your share trading activities only is assessable as ordinary income under Section 6-5 of the Income Tax Assessment Act 1997, whilst your deductions are allowable under section 8-1.

Question 2

Will the Commissioner give an extension to make the election to start holding the shares as trading stock under the Subsection 70-30(2) of the Income Tax Assessment Act 1997?

Answer

Yes.

The Commissioner has given an extension to make an election to start holding the shares as trading stock for the 20XX financial year until XX XXX XXXX.

This ruling applies for the following period:

Year ended 30 June XXXX

The scheme commences on:

1 July XXXX

Relevant facts and circumstances

You have purchased shares in small parcels in previous years as an investment.

In the XXXX financial year share purchases and sales became more frequent.

In the XXXX financial year you increased your time spent reviewing share trades, positions and transactions.

You do not have a business plan but have a strategy when it comes to purchasing shares.

You decide which shares to buy and your intention is to keep them for a short to medium term, and some you intend to hold for a longer term.

You aim to make profits between XX% and XX%.

You reassess your position on a weekly basis, however you check the markets more than five to ten times a day.

Your triggers for purchases and sales are company news, peer valuation, broker reports and chart indicators.

You use stop losses for small volatile shares.

You have a home office that you use to monitor trades and conduct research.

You keep detailed records for each trade and these are submitted to your accountant.

You made XX trades in XXXX financial year, some occurred on the same day, or within a month to X months.

A few trades you made were held for up to X months waiting for the capital to rise.

You invest primarily in speculative shares and high-risk shares, expecting to make a profit in the short to midterm.

Your average trade value is around $XXXX with some trades being for $XXXX.

You have already lodged the XXXX Income Tax Returns.

Relevant legislative provisions

Taxation Ruling 97/11

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 70-10

Income Tax Assessment Act 1997 Section 70-30

Income Tax Assessment Act 1997 Section 102-5

Income Tax Assessment Act 1997 Section 102-10

Income Tax Assessment Act 1997 Section 104-220

Income Tax Assessment Act 1997 Section 118-25