Private ruling: High yield investment scheme - capital loss
Date of advice: 24 January 2024
Published: 11 March 2024
Ruling period: 1 July 2021 to 30 June 2022 | 1 July 2022 to 30 June 2023
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 are a general practitioner. You have lost a total of $X as a result of investments on multiple investment platforms. You formed a strong trust with a person purporting to be a financial adviser who earned your trust. You followed investment advice from this person to invest into multiple financial products. Initially, this financial adviser suggested using a web based platform for investment transactions, later this person encouraged you to transfer funds from this platform to other investment platforms introduced by them. This involved funds being transferred directly to various bank accounts in various countries accumulating to a total amount of $X. In 20XX, you found yourself unable to access the investment platforms where you had invested. You promptly reported it to the local police, providing a detailed account of the events leading to your financial predicament. Local authorities launched an investigation into the matter, but the losses incurred have proven to be irrecoverable. You are able to evidence these transactions via platform screenshots and bank accounts statements, which show the transfer of funds.

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