Investment products may be held as trading stock by a taxpayer carrying on a business of share trading or options trading. However, whether a particular parcel should be treated as trading stock must be determined on a case-by-case basis.

Generally, the tax issues facing share traders versus passive investors are summarised below.

Tax treatment of transactions, returns and related items
Event/item	Share trader	Passive investors
Gain on disposal	Sale on trading account	Capital gain
Loss on disposal	Sale on trading account	Capital loss
Dividends received	Assessable incomeWhen received but may be accounted for when derived (ie when dividend is declared)	Assessable incomeWhen received
Share acquisition	Purchases on trading accountAllowable deduction	Capital costNo immediate deduction allowed
Broker fees	PurchasesAllowable deduction	Capital costNo immediate deduction
GST on broker fees	Financial supplyReduced input tax credits	Capital costNo immediate deduction No reduced input tax credits as no enterprise
Share investment course pre-ownership	If business commenced then allowable deduction, however nexus must be established	Capital costNo immediate deduction
Share investment course post-ownership	Professional developmentAllowable deduction	Investment expensesAllowable deduction
Technical books	Professional developmentAllowable deduction	Investment expensesAllowable deduction
Share trading software	Business expenseAllowable deduction (if not an establishment cost)	Investment expensesAllowable deduction
Interest on margin loan	Interest expenseAllowable deduction incurred to obtain assessable income	Investment expensesAllowable deduction
Prepaid interest	Deduction up to 12 months if s82KZM satisfied	Deduction up to 12 months if s82KZM satisfied
Bank charges on margin loan	Bank feesAllowable deduction	Investment expensesAllowable deduction
Costs to establish loan	Borrowing costsAllowable deduction available over five years	Investment expensesAllowable deduction available over five years