Edited version of private advice

Authorisation Number: 5010084732812

Date of advice: 17 October 2022

Ruling

Subject: Share trading

Question

Were you in a share trading business for the 20XX income year?

Answer

Yes.

We have applied the relevant factors contained in Taxation Ruling TR 97/11 to your circumstances and consider that you were engaged in a share trading business for the 2021 income year.

Question 2

If yes, are the losses from my share trading business deductible from my other income under Division 35 of ITAA 1997?

Answer

Yes.

As you satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997 and your share trading business activity met the assessable income test, you are able to offset the losses from your share trading business against your other income for the 20XX financial year.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You commenced your share activities during the 20XX financial year and made a tax profit in that year.

You fund your share activities using funds sourced from an access to finance facility and your own funds.

You use online stockbroking facilities daily to purchase and sell shares, and to check share prices.

You watch the market and access your accounts on a daily basis, including weekends to see after-market announcements.

You estimate that you spend on an average 45 minutes a day Monday to Sunday on the share trading activities.

Your intention of making profit in the short-term is evidenced as you bought and sold significant amount of shares for the 20XX financial year.

You have a business plan outlining how your stocks would be selected and a guide to the timeframe for place the trade.

You have share trading plan and a risk management plan on the commencement of your share activities.

You did your research by systematic analysis of company's annual accounts and reports, company announcements, ASX website company research facility and public companies' website

You used share trading platform to check all the individual company information like the amount of debt, P/E Ratio, earnings per share and company reports/announcements.

You kept a trading plan log that included basic information about the trade such as entry price, stock name and ticker code, liquidity of stock, the sector and index and the trade number.

You traded daily, you made numerous buy and sell transactions during the 20XX financial year and the average holding period for your shares was one to 2 days.

You made a net loss from your share trading in the 20XX financial year.

You satisfy the less than $250,000 income requirement contained in subsection 35-10(2E) of the ITAA 1997 in the 2021 financial year.

Your share trading activity during the 20XX financial year met the assessable income test in section 35-30 of the ITAA 1997.

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 35-10

Income Tax Assessment Act 1997 Section 35-30