Edited version of private advice

Authorisation Number: 1052192753456

Date of advice: 15 January 2024

Ruling

Subject: High yield investment scheme - capital loss

Question 1

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?

Answer

Yes. You acquired a CGT asset being a contractual right at the time of entering the arrangement.

Question 2

Did a CGT event subsequently happen to that contractual right?

Answer

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.

This private ruling applies for the following periods:

1 July 20XX to 30 June 20XX

The scheme commenced on:

1 July 2020

Relevant facts and circumstances

You invested in a trading platform. You were in contact with an investment manager that gained your trust and you felt comfortable making an initial and subsequent deposits to secure these investments. You believed you had a good understanding of finances and the platform and the investment manager appeared legitimate.

Initially, you could see your investment rising, however over time you became suspicious of the authenticity of the platform and the investment manager. You were not able to withdraw your investments and you found out the investment was not genuine. You made reports to the various authorities.

Relevant legislative provisions

Section 102-5 Income Tax Assessment Act 1997

Section 104-20Income Tax Assessment Act 1997

Section 108-5 Income Tax Assessment Act 1997