Indicia of trade
B1.403 The badges of trade
The Royal Commission on the Taxation of Profits and Income in its final report1 commented in para 116 that each case must be decided according to its own circumstances. The general line of enquiry, favoured by the Tribunals and encouraged by the courts, was to see whether a transaction that was alleged to give rise to a taxable profit bore any of the 'badges of trade'. The Royal Commission set out a summary of what they regarded as the major relevant considerations that bear upon the identification of these 'badges of trade', as follows:
• The subject matter of the realisation. While almost any form of property can be acquired to be dealt in, those forms of property, such as commodities or manufactured articles, which are normally the subject of trading, are only very exceptionally the subject of investment. Again, property which does not yield to its owner an income or personal enjoyment merely by virtue of its ownership is more likely to have been acquired with the object of dealing than property that does.
• The length of the period of ownership. Generally speaking, property meant to be dealt in is realised within a short time after acquisition. But there are many exceptions from this as a universal
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