“In other words it was my sensitivity to losses that led me to not holding this position long enough to make overall profits”
“The following definitions apply for the purposes of the Income Tax Acts - “trade” includes any venture in the nature of trade”
“Deduction of losses from general income “(1) A person may make a claim for trade loss relief against general income if the person - (a) carries on a trade in a tax year, and (b) makes a loss in the trade in the tax year (“the loss-making year”). (2) The claim is for the loss to be deducted in calculating the person’s net income- (a) for the loss-making year, (b) for the previous year, or (c) for both tax years.” … (8) This section needs to be read with - (b) sections 66…(restrictions on the relief).”
“Restriction on relief unless trade is commercial (1) Trade loss relief against general income for a loss made in a trade in a tax year is not available unless the trade is commercial. (2) The trade is commercial if it is carried on throughout the basis period for the tax year- (a) on a commercial basis, and (b) with a view to the realisation of profits of the trade. (3) If at any time a trade is carried on so as to afford a reasonable expectation of profit, it is treated as carried on at that time with a view to the realisation of profits.”
“The word "speculation" is not, I think, as a matter of language, an accurate antithesis either to the word "trade" or to the word "investment ": either a trade or an investment may be speculative. On the other hand, it is certainly true, at any rate in the case of an individual, that he may carry out a whole range of financial activities which do not amount to a trade but which could equally not be described as an investment, even upon a short-term basis. These activities include betting and gambling in the narrow sense. They also include, it seems to me, all sorts of Stock Exchange transactions. For want of a better phrase, I will describe this class of activities as gambling transactions.”
“I wish to make it clear that I am not expressing any view one way or the other as to the position of an individual who carries out comparable transactions. As I have sought to point out, the position of an individual may be quite different, in this connection, from that of a trading company.”
“Really a different conception arises, a conception of a trade or vocation which differs in its nature, in my judgment, from the individual acts which go to build it up, just as a bundle differs from its odd sticks. One may say, I think, without an abuse of language, that there is something organic about the whole which does not exist in its separate parts.”
“The following test may be applied: a person may organise an effort to find things. He may start a salvage or exploring undertaking and he may make profits. The profits are not the profits of the findings, they are the profits of the adventure as a whole. Applying the corresponding test: he may make a loss. It cannot be said that the loss was due to the failure to find. The loss was due to the trade. That tests it very well, because it shows the difference between the trade as an organism and the individual acts.”
“Where the question is whether an individual engaged in speculative dealings in securities is carrying on a trade, the prima facie presumption would be as Pennycuick J suggested in the Lewis Emanuel case, that he is not. It is for the fact-finding tribunal to say whether the circumstances proved in evidence or admitted take the case out of the norm.”
“First, marketable securities, being income-yielding assets usually capable of appreciating in value, are prima facie purchased and sold by way of investment and not by way of trade. Secondly, a series of purchases and sales may sometimes, if carried out pursuant to a deliberate and organised scheme of profit-making, amount to a trade . Thirdly, it is easier to characterise a series of purchases and sales as a trade in a case where they are made by a trading entity as opposed to an individual. Fourthly, in the case of a trading entity that characterisation is more easily made where the purchases and sales are substantial in relation to its other activities, all the more so where they are of frequent occurrence and extend over a long period of time. Fifthly, it is sometimes helpful, although not decisive, to ask whether a series of sales and purchases is speculative or not. The reason why the question is sometimes helpful is that the answer may throw light in one direction or the other, but it is not decisive because according to the circumstances either a trade or a course of investment may be speculative.”
“Before I do so I must state the principal considerations which I deduce from those authorities as being material to the decision of a case where a series of purchases and sales of marketable securities are made by an individual or by a company not already engaged in a business of that kind. In referring to a company for this purpose I mean any corporation, individual or collection of individuals carrying on some form of trade. In Salt v Chamberlain (Inspector of Taxes) Oliver J used the description 'a trading entity' in order to distinguish corporations and individuals of that kind from private individuals and I propose to do the same.”
“Where the question is whether an individual engaged in speculative dealings in securities is carrying on a trade, the prima facie presumption would be as Pennycuick J suggested in the Lewis Emanuel case, that he is not. It is for the fact-finding tribunal to say whether the circumstances proved in evidence or admitted take the case out of the norm.”
“…if it is not trade, what is it?”
“…a series of purchases and sales may sometimes, if carried out pursuant to a deliberate and organised scheme of profit-making, amount to a trade.”
“I think the test which must be used to determine whether a venture such as we are now considering is, or is not, “in the nature of trade” is whether the operations involved in it are of the same kind, and carried on in the same way, as those which are characteristic of ordinary trading in the line of business in which the venture was made.”
“If in this passage the deputy Special Commissioner had in mind the external phenomena of organisation - office accommodation and equipment and staff - then he would, I think, have been in error in attaching so much weight to it. But it seems likely that he also had in mind the taxpayer's admission, in cross-examination, of some casualness and lack of self-discipline (which may, in this context, indicate a lack of internal or mental organisation).”
“I agree that a trader can fail the commerciality limb either because of a lack of organisation … or because of a lack of any interest in making money … But I do not think it follows that as long as the trade is sufficiently organised and the trader hopes to make a profit … that is always enough. Let us assume a trade is well organised. The question whether such a trade is being carried on on commercial lines is not to my mind answered simply by pointing to a hope by the trader to make profits. A trade run on commercial lines seems to me to be a trade run in the way that commercially-minded people run trades. Commercially-minded people are those with a serious interest in profits, or to put it another way, those with a serious interest in making a commercial success of the trade. If therefore a trade is run in a way in which no one seriously interested in profits (or seriously interested in making a commercial success of the trade) would run it, that trade is not being run on commercial lines. “In other words, the concept of a trade carried on on commercial lines has an objective element to it, and cannot be satisfied by proof merely that the trade is well organised and that the trader had a purely subjective hope or desire to make a profit.”
“If in this passage the deputy Special Commissioner had in mind the external phenomena of organisation - office accommodation and equipment and staff - then he would, I think, have been in error in attaching so much weight to it. But it seems likely that he also had in mind the taxpayer's admission, in cross-examination, of some casualness and lack of self-discipline (which may, in this context, indicate a lack of internal or mental organisation).”
“A trade run on commercial lines seems to me to be a trade run in the way that commercially-minded people run trades. Commercially-minded people are those with a serious interest in profits, or to put it another way, those with a serious interest in making a commercial success of the trade.”
“The distinction is between the serious trader who, whatever his shortcomings in skill, experience or capital, is seriously interested in profit, and the amateur or dilettante.”