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Edited version of private advice
Authorisation Number: 1052212088032
Date of advice: 24 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 ruling applies for the following period:
1 July 2021 to 30 June 2022
The scheme commenced on:
1 July 2023
Relevant facts and circumstances
You were contacted by a person presenting themselves as a representative of an investment company. They were contacting you in relation to an investment opportunity where you were told you could invest in shares in an Initial Public Offering (IPO). You expressed interest in this investment and they sent you an email containing further details about the investment including brochures.
You asked for proof of legitimacy of the company and they provided you with several links to several media releases. You researched their website and did a search on the Australian Securities and Investments Commission website via their ABN and ACN and you were convinced of their legitimacy.
You set up an account and logged in via a web portal where you could monitor your shares. You received a contract of sale with all the correct documentation. You received a share certificate and you monitored your account balance on their online portal. You were offered another investment which you declined. You suspected that the investment operation was not genuine and contacted law enforcement agencies and regulatory bodies.
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