"This can be only done if you trade over a certain threshold of...

"This can be only done if you trade over a certain threshold of $ and number of trades. The ATO classifies such persons as "TRADERS" not "INVESTORS" hence CGT loss can be directly offset against income tax. "

It's not a threshold as such, but a determination by the ATO that from the way you approach your share purchasing/selling you are doing it as a business. It is very fuzzy and there are no set rules.

This ATO document explains it a bit further...

http://www.ato.gov.au/businesses/content.asp?doc=/content/21749.htm

Remember also that if you are classified as a trader, you lose the CGT discount.

"Stocks I plan to hold long term are held in "capital account" hence can be liable for 50% CGT offset once sold."

I have been told on 2 separate occasions by the ATO around 2000 that this is not the case. They claimed that you will either be deemed a trader or an investor, but cannot be both. At that time I had a substantial share holding that had large capital gains that would qualify for the CGT discount if sold. I wanted to start trading on a regular basis and was told by the ATO that if I became deemed to be a trader and then sold any of this substantial shareholding that I had for years, that the gains would become income to me as a trader and not fall under the CGT system. The advice I was given by the ATO at the time was to set up a company to do my share trading. As a company is a separate legal entity under the tax system, it, not I, would be deemed to be a trader. This was the safest way to quarantine my trading from my investing.

That been said, I have seen many posts claiming what you have said. However, I have never seen any ATO document that specifically suggests that one legal entity can be both a trader and investor. Even the document I have linked to above seems to suggest you are one or the other.

I may be wrong and may have been given incorrect advice by the ATO, but I suggest be very careful. Particularly if you currently have a substantial shareholding that is showing gains for longer than 12 months.