Ask Colin

What are the basic factors that indicate whether I am a share trader or an investor?

This is not a simple question to answer. Nor am I qualified to give you what amounts to taxation advice. The tax department have some guidelines which a fairly well publicised. There is a good discussion in Tony Compton's book Shares, Derivatives and Taxation.

The only comment I would make is that you will know whether you are running a trading business or not. If you are in doubt as to whether you are conducting a business, then maybe you are not. The tax department has a basic responsibility to protect the treasury. If you try to claim big losses against other income because of a few large losing "trades", the fiscal fiend is likely to try to claim you are not a trader, so you have to offset the losses against capital gains, rather than other income. You will have to meet all the guidelines that you are conducting a business as a trader.

On the other hand, you may try to maintain a position as an investor so as to pay capital gains tax at concessionary rates rather than full income tax on "trades

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