How is the interest received on Convertible Notes treated for taxation purposes if shares are received in lieu of cash on conversion?
I found this ATO page but it's not 100% clear. https://www.ato.gov.au/general/capital-gains-tax/shares,-units-and-similar-investments/convertible-notes/#traditionalsecurity
It seems to suggest that the interest isn't taxed as income but rolled up as part of the cost base of the shares. This seems strange to me as I would have thought it would be taxed as interest income on conversion. If it becomes part of the cost base do you then get the 50% CGT discount on it as well?
I have some convertibles that are being converted next month & the 1 year holding period is around mid June.
