I’ve been scammed by my broker, can I claim it as a tax loss?

I invested funds through a broker, thinking I was using a legitimate trading platform when in fact I wasn’t – it was a scam. For tax purposes, how do I claim this loss?

Mark Molesworth, tax partner at BDO, tells me that generally, when an investor is scammed and they have no recourse to recover their funds, the investor will realise a capital loss. Capital losses can be used to reduce capital gains derived in the same income year, or capital gains derived in a later income year.

The losses reduce the capital gains before the CGT discount is applied. It is important that the investor keeps all the records that they can relating to the loss, in case of a future Australian Taxation Office query.

In some very limited circumstances, a taxpayer may be a trader in financial assets. In such cases, the loss through a scam will give rise to an ordinary income tax deduction. Such a deduction can be used to reduce all taxable income, not just capital gains. Because the circumstances in which this sort of claim can be made are limited, it would be important to obtain professional advice before doing so.

I am 86 and my wife is 78. I have $400,000 in my SMSF made up of cash and shares – it’s in pension mode. I have heard that the distribution of these assets to my beneficiaries may be complicated after I have died if the fund is still in existence. Would it be easier for the executors if I closed the fund now and converted the assets to cash to be held in term deposits, rather than the fund still existing when I die?

I don’t know if complicated is the right word here, but if you die with money in superannuation, and any funds are left to a non-dependent, there will be a death tax of 17 per cent on the taxable component of that money.

Given your age and the size of the fund, I think a better strategy would be to transfer the non-cash assets to you and your wife in specie and then close the fund down. There should be no capital gains tax in the fund as it’s in pension mode, and you would receive them at a base cost of market value at the date of transfer.

You could then review your estate planning and decide whether the shares should be left to your beneficiaries or simply cashed out at some stage when it’s convenient.

I have been trying to withdraw $7500 from Australian Super since July 10 but have been prevented from doing so. Online, there are often no figures for either of my accounts and it says ‘we can’t show you these at the moment’. I have called them – and been cut off after 20 minutes of holding. I have emailed them and received a generated response saying they are sorry to hear I am having problems. I finally got to actually speak to someone on Wednesday and, after a lot of coaxing, she told me I wasn’t the only one with this problem. When I asked how long this had been going on, she finally admitted, ‘About a month or so.’ If this was a bank and I had been prevented from withdrawing funds for two weeks, for no reason, there would be a series of questions being asked about the viability of the bank. Have you heard anything about Australian Super?

Australian Super is one of our largest superannuation funds, but it’s become a sad reality that the bigger the organisation, these days, the longer they take to answer the phone. Just this week, I waited 40 minutes for St George Bank to answer, and gave up on Latitude after waiting 50 minutes.

An Australian Super spokesperson said they are aware that some members are having difficulty with service requests, and apologise to those members who are experiencing difficulties. They claim they are implementing technology fixes to resolve any outstanding online issues over the coming weeks. Fingers crossed.

My sister has just gone into aged care and receives a part-age pension from Centrelink. She is wondering if her pension will automatically increase because of the recently increased asset and income thresholds, or if she has to apply to Centrelink.

Your sister’s pension will automatically be adjusted based on the assets and income Centrelink has recorded for her. This is something you should review as it is not uncommon that assets reduce while someone is living in aged care as the cost is often greater than your income. Your sister’s new payment amount should have started by now.

Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. Email: [e-mail]

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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