Almost carrying on a share trading business
The Administrative Appeals Tribunal (AAT) confirmed the Hartley vs The Commission of Taxation (2013) decision that despite a number of factors pointing to a share trading business being carried on by the taxpayer, they were in fact a share investor.
It is interesting to note that the taxpayer had a considerable turnover, and in one year exceeded $900,000. There were more than 20 transactions in the year and sometimes as many as 40, and the taxpayer maintained a separate office and kept records and accounts of the transactions.
However, it was held that despite the above factors, the taxpayer was not carrying on a share trading business for the following reasons:
- The buying and selling of the shares was irregular and not routine.
- The taxpayer did not have a coherent plan that he applied systematically.
- The taxpayer did not set targets and could not demonstrate the conduct of background research.
- The taxpayer was engaged in other fulltime work.
There has been another recent case also favouring the Commissioner which confirms the level of scrutiny that should be applied when considering whether a taxpayer determines they are carrying on a share trading business or is in fact, a share investor.