Badges of Trade is the criteria that distinguish trading from investment for taxation purposes. They were set out by the Royal Commission on the Taxation of Profits and Income in 1954. Their badges of trade are the criteria which are used to decide whether a transaction can lawfully be considered “trade” or not. There were originally six badges trade, but now there are nine badges of trade. You can find a history of this concept, and summary of the nine badges of trades cases at http://www.taxationweb.co.uk/tax-articles/business-tax/the-badges-of-trade.html

Any trade on profits, unless there is a reasonable person can provide evidence that this is no income of profits. In Hong Kong, the capital of profit shall not pay taxes.

In order to prove the nature of trade, badge of trade is considered:
1. The intention of profit tax items.
2. The theme of goods (such as in the original hypothesis can enjoy the acquisition, such as rent).
3. The length of the ownership, similar transaction frequency
4. Reasons for processing,
5. Medullary supplement, etc.