you are either a business or not a business
if you are buying and selling regularly, like ten trades a month or more, not holding your shares long term, you are a business
but generally, people do not want to be a business, even though they are a business in reality
why? because not being a business means those one or two or more stocks that come good with big gains, you can claim the 50% CGT tax discount if you hold them for more than 12 months
this is the benefit of not being a business
the benefit of a business is if you have a normal job and if your share trading makes a loss, you can claim your share trading loss against your employment income and receive a big tax refund
i started shares not as a business. for my first two years i lodged capital gains in my tax return.
then, in year 3, i had a big capital gain.
then, in year 4, came the GFC, which wiped out most of my capital. i had a huge CGT tax bill to pay for year 3 but would use most of my capital to pay it
so I applied to the ATO to be a business (for all years). they allowed me to be a business because I was a business
by adjusting your 'closing stock' as a business, you can reduce your tax when bad times come
i reduced my year 3 taxable shares income by over 50% by being a business
then i lodged my year 4 tax return asap and received a tax refund which paid my year 3 tax bill
my share trading capital remained in tact
this is the benefit of being a business
it helps you during the bad times
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you are either a business or not a businessif you are buying and...
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