Private ruling: High yield investment scheme - capital loss
Date of advice: 15 January 2024
Published: 26 February 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: In your application, you stated that you have a history of undertaking share trading activities. During the 20XX financial year you made the decision to diversify your trading activities to also include various financial investments. You were directed to the investment via advertising on social media. You had several account managers who would recommend various trades. They would call you three to four times per week and advise you on the next trades to place and you would place these trades on the platforms. You also undertook numerous trading short courses that were offered as part of the platform. This included trading education, charting, event-based trading and arbitrage. You made numerous gains and losses on the platform throughout your trading activity. During the 20XX financial year you attempted to make a withdrawal from the platform. You have made numerous follow ups with no response to the withdrawal issue. An analysis undertaken by third party investigators indicated that the investments had been moved through a complex system of wallets and the current location of the funds is unable to be substantiated. You believe the funds have been stolen.

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