It's more than you have stated. I have been down this path, with the assistance of my Accountant. The ATO has written guidelines that one can test themself against to determine whether they fit within the criteria that the ATO requires to determine whether it will recognize the taxpayer (i.e. a company, individual, etc...) as "trader".
Once recognized as a "trader" the trades are treated as operational trading stock, in much the same way that a retailer would have trading stock sitting on the shelf. This means that trades are treated as COGS purchases and Sales Revenue (per the P&L Statement). Under this status CGT provisions do not apply, as the taxpayer is consider to be conducting an operating business in the form of share trading. This differs with the accounting and tax treatment of an "investor", in which the trades are considered to be investment asset held on balance sheet that are treated as 'capital gains' or 'capital losses' when disposed of - in much the same way that a company (to use your example) might dispose of (sell) a piece of equipment that it no longer needs for its production processes (as an example). All non-trading stock asset disposals are caught under the CGT provisions.
This is what I meant earlier in my reference to being treated 'on income account' (P&L) v. 'on capital account' (Balance Sheet). It's accountant-speak jargon.
In day-to-day operations, the main difference is that when treated on income account as trading stock (i.e. the taxpayer is an ATO recognized "trader"), any losses from the trading activity by the taxpayer can be offset against other income generated by the same taxpaying entity (whether an individual or a company). When treated as an "investor", which is the default position by the ATO, unless you satisfy their multi-point "trader" test (whether an individual or company), then all your 'trades' are treated as investment acquisitions and disposals under CGT provisions. As an "investor" (individual or company), if you close out the financial year with a surplus of capital losses then they cannot be offset against income from other sources/activities (conducted by the same taxpaying entity) during that year. The losses must be quarantined and are only able to be offset against future capital gains in future years.
It might sound like a very technical and subtle point of difference, and most often that would an accurate observation, but there can times in which the different tax treatment can have an impact on the taxpayer, depending on their situation at hand.
To summarize, this is why I alluded to the fact that a taxpayer cannot solely rely on the notion that "I have done "x" amount of trades during the year, so surely I am a trader", or "I am buying/selling shares often through my company, so my company must be a trader". Volume and frequency of trades is one criteria, but there are other boxes/criteria that also must be met.
Yes, you could always get a private ruling, to remove any doubt.
I couldn't speak to the ATO penalties, as I have no experience with them. My personal policy has been to do thorough due diligence (with professional assistance, if required) to find out what the rules are and then work within them with a high degree of confidence. Sometimes I wonder why on earth I bother going to the lengths I do, but every now and then I am exposed to a horror story that quickly reminds me why I have enjoyed a stress free relationship with the ATO! (lol)
Cheers.
PS. I cannot speak to option trading because I have not investigated that route. My comments relate primarily to shares. Interestingly, having traded futures, I can say that the default presumption there is to assume "trader", rather than "investor". There's case law around this which has been tested for futures trading, which differs from buying/selling shares because of the different legal nature of a futures contract v. share equity. It's a fairly deep rabbit hole!
PPS. Oh, and I didn't even talk about the treatment of 'expenses'. Very quickly, a "trader" accounts for them as operating expenses (again, on the P&L), while an "investor" must capitalize them to the cost base of each asset on the balance sheet (often by way of apportioning the costs between assets), to be brought to final account when the asset is finally "disposed" (sold).
