Cut and paste from ATO google site, hope this helps....

Cut and paste from ATO google site, hope this helps.
mce-anchorShareholding as investment

A shareholder is a person who holds shares for the purpose of earning income from dividends and similar receipts. For a shareholder:

• the cost of purchase of shares is not an allowable deduction against current year income, but is a capital cost
• receipts from the sale of shares are not assessable income – but any capital gain on the shares is subject to capital gains tax
• a net capital loss from the sale of shares can't be offset against income from other sources, but can be offset against another capital gain or carried forward to offset against future capital gains
• the transaction costs of buying or selling shares is not an allowable deduction against income, but are taken into account in determining the amount of any capital gain
• dividends and other similar receipts from the shares are included in assessable income
• costs (such as interest on borrowed money) incurred in earning dividend income are an allowable deduction against current year income.

mce-anchorShare trading as business

A share trader is a person who carries out business activities for the purpose of earning income from buying and selling shares. For a share trader:

• receipts from the sale of shares constitute assessable income
• purchased shares are regarded as trading stock
• costs incurred in buying or selling shares – including the cost of the shares – are an allowable deduction in the year in which they are incurred
• dividends and other similar receipts are included in assessable income.