Edited version of private advice

Authorisation Number: 1052013877453

Date of advice: 9 August 2022

Ruling

Subject: Investment scam - capital loss

Question

Can you claim a capital loss as a result of the investment scam?

Answer

Yes. A capital loss cannot be offset against income from other sources but must be offset against capital gains and may be carried forward to offset against future capital gains.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commences on:

29 March 20XX

Relevant facts and circumstances

You set up an account with COMPANY A online on XXXX and deposited funds into the COMPANY A Australian Bank account. This money was then transferred from COMPANY A into the COMPANY A exchange trading platform.

COMPANY A provided a log in to the platform where all trades could be monitored.

In the first few days you made a return and you withdraw funds from your Sure Exchange account to your crypto wallet.

When this transaction was complete you decided to invest some additional funds, which were transferred via your crypto.com BTC wallet to the COMPANY A wallet that had been set up for you.

You and your COMPANY A Account Manager spoke almost daily about the status of your trades, which were going very well, so you decided to try the Silver Package.

Your trades continued to go well and your COMPANY A Account Manager offered you a trial for the Gold Package, which gives access to Initial Coin Offerings (ICO's). If you were to invest half of the required amount for the Gold Package upfront and were happy with the returns, you could invest the remaining at the end of the trial.

You invested $XXXX on XXXX and your COMPANY A Account Manager put you in contact with another COMPANY A representative, who traded on the gold market, to discuss upcoming ICO's and Non-Fungible Token's (NFT's).

Your investment was going well at the time and you made some additional withdrawals to your crypto wallet.

With the confidence that you could withdraw your money at any time, you invested the remaining funds to qualify you for the Gold status.

You scheduled your next withdrawal with your COMPANY A Account Manager on XXXX via email. The withdrawal never took place and both your COMPANY A Account Manager and the other COMPANY A Representative that you had been introduced to were uncontactable.

On XXXX your COMPANY A account platform started showing an "internal server error" and no more trades were visible.

You have attempted to manually make a withdrawal from your account, which are showing as "pending" on your COMPANY A platform.

You attempted to contact the customer help line but the number had been disconnected.

You filed a police report on XXXX with police, who responded on XXXX that they were unable to assist with the recovery of the funds and that they were also unable to determine who is in possession of the funds.

Overall, you invested $XXXX and have been unable to recover any of these funds.

You have since abandoned your right to seek compensation for the loss.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1(2)

Income Tax Assessment Act 1997 Section 102-10(2)

Income Tax Assessment Act 1997Section 102-20

Income Tax Assessment Act 1997 Section 104-5

Income Tax Assessment Act 1997 Section 104-20

Income Tax Assessment Act 1997 Section 104-25

Income Tax Assessment Act 1997 Section 104-30

Income Tax Assessment Act 1997 Section 108-5

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