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Edited version of private advice
Authorisation Number: 1052053221553
Date of advice: 9 November 2022
Ruling
Subject: Share trader or investor
Question
Were you carrying on a business of share trading in the income year ended 30 June 20XX?
Answer
No, while there are some business-like characteristics of your share activity, it is considered that it does not amount to a business of share trading in how it has been conducted to date. The buying and selling of shares has been relatively limited and intermittent and has only involved a fairly minimal amount of capital. You have no training or background in such financial matters and do not have a sophisticated trading strategy. As your share activity did not amount to a trading business, it is considered your shares are held for investment purposes and so gains and losses made from the sale of those shares are subject to the CGT provisions.
The question of whether a business is being carried on is a question of fact and degree and is determined on a year by year basis. If your 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 should the level of activity increase or become more sophisticated or structured.
Further information on share trading and share investing can be found at the ATO website, search for 'QC 66047'.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You bought and sold shares intermittently over an X month period.
You injected under $XX of your own money into the activity.
You made small gains by buying low and selling higher.
You have no knowledge or experience in such financial matters.
Some months you traded infrequently, some months you traded daily.
Shares were held for varying periods (days to months).
You did not have an intention to trade shares.
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 100-25