Doctor found to be a share trader
In a recent decision, the AAT held that a medical doctor was engaged in a share trading business not only in relation to listed shares she acquired, but also in relation to units she acquired in a listed aged care property trust that she had purchased from her family trust (albeit, for more than their market value at the time). Moreover, it was these units that generated an unrealised loss of over $1 million and which, as a result, enabled to her to reduce her other taxable income for the year ended 30 June 2009 below nil.
In arriving at its decision that the taxpayer was carrying on a share trading business, the AAT took into account the following factors:
- the nature of the activities and whether they have the purpose of profit-making;
- the complexity and magnitude of the undertaking;
- an intention to engage in trade regularly, routinely or systematically;
- operating in a business-like manner and the degree of sophistication involved;
- whether any profit/loss is regarded as arising from a discernible pattern of trading; and
- the volume of the taxpayer's operations and the amount of capital employed by her.
If the taxpayer is a share trader, losses may be deductible against other income. If the taxpayer is not carrying on a business of share trading, capital losses can only be applied to reduce capital gains.
