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Taxation of interest on Convertible Notes, page-15

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Tarvold

18,454 Posts.

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29/04/21

15:01

Post #: 52816354
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Originally posted by Headhunter: ↑

As I explained above, you do not look to the companies ability to repay ratger the terms on which the note is issued specifically if it has been issued at a discount, has deferred interest or is capital indexed.

Para 2 of TR 96/14 is quite explicit that if a security has deferred interest, then its not a traditional security.

I also note that ATO IDs are not binding on the ATO where as Tax Rulings (TRs) are.

As mentioned above you can lodge your return in the way you see fit, but I feel you are latching onto half of a sentence in the definition of eligible return in the legislation to try justify not paying tax on the deferred interest component. The words in the legislation specifically direct you to only have regard to those factors listed above (deferred interest etc.) by the use of the term "by reason that.."

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Actually it was always my intention to treat the interest paid in the same way any other loan until it was suggested to me that it should be rolled over to the base cost.
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