Private ruling: High yield investment scheme - capital loss
Date of advice: 17 January 2024
Published: 26 February 2024
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 2022

Ruling: Q1: Did you acquire a CGT asset (as defined in section 108-5 of the Income Tax Assessment Act 1997 (ITAA 1997)) as a result of entering into [description of the fraudulent arrangement]? | A1: Yes. You acquired contractual rights from the outset of the arrangement. | Q2: Did a CGT event subsequently happen to those contractual rights such that a capital gain or capital loss may be made? | A2: Yes. CGT event C1 happened in respect of the contractual right when you discovered your loss and repudiated the contract.

Relevant facts and circumstances: You were approached by an individual claiming to be a recruiter via WhatsApp. The recruiter introduced you to an investment platform, where you had to complete a series of tasks involving investments. Initially, after completing the tasks, you received your investment back along with promised commissions. This created a sense of trust and legitimacy. As you continued, the tasks required increasingly larger amounts to invest. When you were unable to continue paying, you requested a withdrawal of your initial investment, which was denied. You have filed a report with the Australian Cyber Security Center and you hold a copy of it. The scheme was presented to you as a legitimate investment opportunity, and there were no indications to you that it was not genuine. The individuals involved portrayed themselves as representatives of a legitimate investment platform.

Relevant legislative provisions: Section 102-5 Income Tax Assessment Act 1997 | Section 104-20 Income Tax Assessment Act 1997 | Section 108-5 Income Tax Assessment Act 1997