The AAT has affirmed a decision of the Commissioner that a taxpayer was a share investor and was not carrying on a business of share trading, and therefore deductions claimed on a premise that a business existed were denied for the relevant years.
The taxpayer was during relevant times a full-time council employee. According to the taxpayer, he had been actively involved in the share market for many years, which took him about 15 hours per week. He also had an arrangement with his employer where he could trade during business hours and then make up any time after hours. For the relevant tax years (income years ended 2010 and 2011), the taxpayer lodged income tax returns claiming significant deductions on the basis that he was carrying on a business of share trading.
After an audit, the Commissioner determined the taxpayer was a share investor and issued assessments refusing the deductions.
The AAT considered each of the relevant factors established in case law in determining whether or not the taxpayer was engaged in a business. Although noting the “matter was finely balanced”, the AAT was of the view that the factors pointing against the existence of a share trading business were more significant than those pointing in favour of the existence of a share trading business.
(AAT Case [2013], AATA 601, Re Hartley and FCT, AAT, Ref Nos: 2012/5198; 2012/5199, Deutsch DP, 26 August 2013.)
[LTN 165, 27/8/13]