Section 2 of Inland Revenue
Ordinance states that the word "trade" includes every trade and manufacture, and
every adventure and concern in the nature of trade. Obviously, this is
not a conclusive definition of “trade”. Nor does it give a test of
what is a trade. In fact, it expands the ordinary meaning of the word "trade".
Perhaps in reality a
trade takes a variety of forms so that it is virtually impossible to
give a full definition for it.
In general, trading consists
of purchase and sale of goods, manufacturing, or provision of services.
In the Board of Review case
D55/87, an ex-amateur jockey who made substantial winnings from betting
on horses was held that he had not carried on a business and therefore
the profits were not assessable. Click here to read what the Board said.
In the Hong Kong tax case CIR
versus Dr. Chang Liang Jen 1 HKTC 975, a speculator buying and selling
shares in the stock market was held as not carrying on a trade.