Private ruling: Deductions - fraudulent transactions
Date of advice: 9 July 2019
Published: October 2019
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to claim a tax deduction for funds transferred as a result of fraud under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Having considered your circumstances and the relevant factors, you are eligible to claim a deduction for loss under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). Further information on deductibility can be found on our legal database at our website ato.gov.au and entering ATO ID 2001/318 into the search bar.

Relevant facts and circumstances: A series of fraudulent transactions were initiated against your business. These transactions were made without the individual cardholders' authority and all were charge-backed by the bank. Accordingly, your company suffered losses from charge-backs as well as goods supplied in these fraudulent transactions. Despite contacting your bank on several occasions and implementing more stringent security procedures for these transactions, your bank advised that all such transactions were fraudulent. Subsequently, all were reversed as charge-back transactions.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1