Tax Implications - Trader Vs Investor, page-10

about the points made, which I have numbered above & below:

1. CGT method gives you a 50% tax discount on any shares sold that were held for over 12 months. you must be willing to sacrifice this 50% tax discount if you stop using the CGT method

2. your accountant has no idea. what he said is irrelevant & also wrong (which I will explain later)

3. "businesslike" is not the most important criteria. the most important criteria is volume, regularity & repetition of activity, that is, frequent short term trades. for example, if you perform an average of 5 buy & sell trades per month, this is a business. there are legal cases where the traders were not particularly 'businesslike' but were ruled to be a business because they bought & sold many times in a month

4. trading or selling your long term holds in small parcels won't really qualify as a criterion for a business

5. small capital is OK. a business can be carried on in a small way (Thomas vs FCT; 1972)

6. holding a small portfolio is irrelevant. since a trader buys & sells frequently, the stock on hand at anytime should be far less than the sales for the year. for example, at 30/6/17, my closing stock was 10% of the value of my sales for the year

7. why do you want to be a trader (i.e., a business)? do you have share trading losses, including for previous years, that you wish to offset against employment income? if you have prior year losses & wish to amend prior year tax returns, the ATO will probably flag those amendments & make an inquiry. otherwise, you can simply self-assess your situation, based on the guide here: https://www.ato.gov.au/General/Capi...ng-as-investor-or-share-trading-as-business-/

as for self-assessing the criteria, simply download your trades into a Excel Spreedsheet and (i) sort the trades by date; (ii) then sort the trades into buys & sells; (iii) then count the number of buys & sells you did for each month. the number of buys & sells will indicate whether there is regularity & repetition in your trading

if you need (free) help, simply email me. if have successfully helped a few Hot Copper members change their status to a trader & get a tax refund. i am (well, i used to be) an expert on this matter

regards