Private ruling: High yield investment scheme - capital loss
Date of advice: 16 February 2024
Published: 2 April 2024
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 2021

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 a high yield investment scheme? | A1: Yes. You acquired a CGT asset being a contractual right at the time of entering the arrangement. | Q2: Did a CGT event subsequently happen to that contractual right? | A2: Yes. CGT event C1 happened in respect of the contractual right when the contractual right came to an end. Section 104-20 of the ITAA 1997 outlines the rules for CGT event C1.

Relevant facts and circumstances: You were in contact with a person purporting to offer you some investment advice and opportunities. This person was your mentor assigned to you by the investment platform. You deposited a sum of money and appeared to make some gains from that investment. However, you still owed the trading platform $X. As a result of that your account was subsequently frozen. You became aware that the platform and the activities were fraudulent. Based on these circumstances, you concluded that the investment was not genuine and suffered a financial loss.

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