- Most ASX stock punters, regardless of what they say or think...

- Most ASX stock punters, regardless of what they say or think they are doing (eg: "I am investing", or "I am trading"), are actually classified by the ATO as "investors", as opposed to "traders". There are specific rules associated with whether the ATO will accept and treat someone being classified as a "trader". Making a whole bunch of trades during any given financial year is only part of the required criteria. Having a "trader" status means that your profits/losses are treated as operating income/loss and are not treated as capital gains/losses (as per CGT provisions).

I agree with what you said here, but I may be a bit pedantic saying that the ATO doesn't classify you as "Investor" or "Trader" until they actually assess your share buying/selling history. I have a company that purely buys and sells shares and options and I "think" that the company is a trader, but until the ATO queries the company's share trading history I won't know whether they would see the company as an investor or trader. I "think" the company qualifies as a trader and prepare the company tax return on that basis, but it could turn out the the ATO has a different opinion.

I would assume that one can only get the "trader" status, apart from being audited by the ATO, by asking for a ruling from the ATO.

Since a company cannot claim the 50% discount for shares held more than 1 year, I do not think there would be a huge difference in tax payable whether the company is treated as "investor" or "trader". What would be interesting and I don't know what the practice is, is if an individual genuinely thinks he is a "trader" and is assessed as an "investor" or vice-versa, whether the ATO would apply penalties if the ATO decides otherwise and there is a deficit in the tax owing as a result of the ATO decision. I am thinking here on those individuals that are borderline, rather than those who blatantly in the wrong camp.