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Edited version of private advice
Authorisation Number: 1052214727747
Date of advice: 24 January 2024
Ruling
Subject: CGT - high yield investment scheme
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 ended. Section 104-20 of the ITAA 1997 outlines the rules for CGT event C1.
This ruling applies for the following period:
Year ending 30 June 20xx
The scheme commenced on:
1 July 20xx
Relevant facts and circumstances
In January 20xx you made online enquiries about investment trading. You were contacted by representatives of an investment platform (the Platform) and induced to invest on their platform.
The investment process entailed transferring funds to a third party account, where the Australian currency was converted to Cryptocurrency. This amount was then transferred to the Platform and represented as X dollars.
You undertook active trading on the platform in a variety of investment types. Two representatives of the Platform would regularly contact you to encourage you to invest further funds, through the same process of depositing Australian currency to the third party account, from where it would be credited to your account on the Platform.
In May 20xx, a friend of yours raised some concerns about the legitimacy of this platform. You had made one previous small withdrawal, and following your friend's advice you tried to make further withdrawals. You were unable to do so and your account on the platform was closed.
You made enquiries and shortly learned the platform was not genuine and you had not been trading any real assets. None of your funds have been returned.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-20
Income Tax Assessment Act 1997 section 108-5