Hi ATO's website has the followings for the transferring from Trader to Investor.
Changing from trader to investor
If your activities change from trader to investor, and you stop holding your shares as trading stock, these shares no longer form part of your business as trading stock.
When your activities change, the treatment of your shares also changes, as if:
- just before the change, the shares were held as trading stock that you own
- you stopped holding the shares as trading stock and you sold them at cost to someone else, at arm's length and, in the ordinary course of business
- you immediately bought the shares back for the same amount.
As to become a trader you need to have numberous activities from buy/sell the shares. If someone didn't buy/sell in the past financial year 2025. Does it mean he needs to be treated as an Investor rather than a Trader in 2025?
When was treated as a trader in the previous year 2024. The share holdings were trading stocks using market value method. When i convert him to investor in the 2025 financial year, how do i get rid of the closing market value of the shares that were previously reported in the 2024 yr tax return? ATO says that you need to sold the shares at cost to someone and immediately bought them back, could i say that he sold the shares at market value to himselves? Because it would be hard to trace down the cost of each parcel when he has been treated as trader in the past years.
Could someone help me to get clear on this query? Many thanks.
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