Decision impact statement
Mehta and Commissioner of Taxation
Venue: Administrative Appeals Tribunal
Venue Reference No: 2011/2220
Judge Name: Mr M D Allen, Senior Member
Judgment date: 13 April 2012
Appeals on foot:
None
Impacted Advice
Relevant Rulings/Determinations:- None
Subject References:
Income tax
whether carrying on a business of share trading or investing in shares
 This document is not a public ruling, but provides a statement of the Commissioner's position in relation to the decision and how the law will be administered as a consequence of the decision. Any proposals for changes in the law are matters for government and it is not appropriate for the Commissioner to comment. |
Précis for the web page index:
Outlines the ATO response to the Tribunal's decision in this matter which concerned whether the particular taxpayer's activities in share trading amounted to carrying on a business of share trading.
Decision Outcome:
The Tribunal set aside the Commissioner's objection decision and remitted the matter to the Commissioner with the direction that in the tax year ending 30 June 2009 the taxpayer carried on the business of trading in shares.
Brief summary of facts
The taxpayer was in full time employment at all times during the income years under review. On 26 June 2007, the taxpayer made an application for a margin lending facility and soon thereafter made his first purchase of shares.
During the income tax year ended 30 June 2008, the taxpayer made a total of 32 purchases and 3 sales. The taxpayer did not regard himself to be in a business of share trading for the year ended 30 June 2008.
During the income year ended 30 June 2009, the taxpayer carried out a total of 22 purchases and 27 sales of shares. He contributed $150,000 of his own capital to purchase shares and borrowed another $500,000 from BT Australia. The taxpayer also established a dedicated office for the share trading business in his home.
In his income tax return for the year ended 30 June 2009, the taxpayer claimed a loss of $125,293.
The Commissioner disallowed the claim on the basis that the taxpayer was not carrying on a business of share trading. The taxpayer objected and then applied to the Administrative Appeals Tribunal for review of the objection decision which affirmed the original decision.
Issues decided by the tribunal
The Tribunal found that the taxpayer was in the business of carrying on a business of share trading in the 2009 income year.
ATO view of Decision
The case was decided on its facts and will not have any impact on any existing or future litigation proceedings.
Administrative Treatment
None
Implications for ATO precedential documents (Public Rulings & Determinations etc)
None
Implications for Law Administration Practice Statements
None
Court citation:
[2012] AATA 208
2012 ATC 10-246
88 ATR 290
Legislative References:
Income Tax Assessment Act 1936
s 262A
Income Tax Assessment Act 1997
s 8-1
Taxation Administration Act 1953
s 14ZZK
Case References:
Federal Commissioner of Taxation v Dalco
(1990) 168 CLR 614
90 ATC 4088
(1990) 20 ATR 1370
Federal Commissioner of Taxation v Radnor Pty Ltd
(1991) 102 ALR 187
91 ATC 4689
(1991) 22 ATR 344
Federal Commissioner of Taxation v Whitfords Beach Pty Ltd
(1982) 150 CLR 355
82 ATC 4031
(1982) 12 ATR 692
Hope v Bathurst City Council
(1980) 144 CLR 1
80 ATC 4386
(1980) 12 ATR 231
John v Federal Commissioner of Taxation
(1989) 166 CLR 417
89 ATC 4101
(1989) 20 ATR 1
Martin v Federal Commissioner of Taxation
(1953) 90 CLR 470
North Australian Cement Limited v Federal Commissioner of Taxation
(1989) 89 ATC 4765
(1989) 20 ATR 1058
Spriggs v Federal Commissioner of Taxation
(2009) 239 CLR 1
2009 ATC 20-109
(2009) 72 ATR 148
The Commissioners of Inland Revenue v Livingston
(1927) 11 TC 538
Thomas v Federal Commissioner of Taxation
[1972-73] ALR 368
3 ATR 165
72 ATC 4094
Williams v Federal Commissioner of Taxation
(1972) 128 CLR 645
72 ATC 4157
(1972) 3 ATR 236