It is a business activity as it is a service. It may lose money in the early years covered by the investors money NOT the govts as the investor expects to make a gain down the track and ultimately pay more tax. If you just invest to knowingly just lose money to save tax with no expected gain in the future then your an idiot. Most don't do this and expect to gain doesn't mean they will be ultimately successful.
If losses cant be offset then gains should be taxed seperately as well for taxation fairness
Again no it is not a subsidy it is the investors money until tax is assessed. Things like fhog etc are subsidies as they are not the particular taxpayers money.
