Edited version of private advice

Authorisation Number: 1052221316709

Date of advice: 6 March 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 C2 happened in respect of the contractual right when the contractual right ended. Section 104-25 of the ITAA 1997 outlines the rules for CGT event C2.

This ruling applies for the following period:

Year ending 30 June 20xx

The scheme commenced on:

1 July 20xx

Relevant facts and circumstances

In 20xx, you were approached by individuals claiming to represent an investment company (the Company).

Over the next few months people claiming to be representatives of the Company and related entities availed you of a range of investment opportunities.

You made payments to various accounts for these purported investments, before realising that they were not genuine.

The following year you were approached by a private investigation firm (the Investigators) who were investigating the individuals behind the Company and had found your name on a list of victims they had obtained. You engaged the Investigators to attempt to recover your funds.

You paid $xx,xxx in fees and charges to the Investigators and other entities in the process of recovering your funds.

Several years later, the Investigators had not made any progress towards recovering your money, and you formally terminated their services.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 104-25

Income Tax Assessment Act 1997 section 108-5