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Edited version of private advice
Authorisation Number: 1052213863482
Date of advice: 26 February 2024
Ruling
Subject: Structured debt securities
Question
Will any gain or loss made on the redemption or disposal of the structured products be included in your assessable income in the year of income in which the disposal or redemption takes place?
Answer
No.
You were a foreign resident over the period you purchased and disposed of the securities. As all of the securities are foreign products you are not assessable on the gains or losses made upon disposal or redemption of the securities unless they are taxable Australian property (TAP), which can be taxable Australian real property (such as real property situated in Australia) or indirect Australian real property interests.
The securities you purchased have no ability to be converted for any of the underlying assets, therefore you cannot be said to have held any interest in the underlying assets. On this basis, the products you held cannot be TAP.
Therefore, none of the gains and losses you made upon the disposal or redemption of the notes are attributable to an Australian source. As such, these gains and losses will not be included in your assessable income.
This ruling applies for the following period:
Year ended 30 June 20xx
The scheme commenced on:
1 July 20xx
Relevant facts and circumstances
You are, and have not been, not a resident of Australia for taxation purposes since prior to purchasing the securities disposed of in the relevant income year.
You invested in a number of derivative financial investment products (notes) through an Australian financial adviser.
The notes are debt instruments of which the receipts of interest are linked to the performance of Australian and international shares.
You are not running a business of trading structured notes or securities.
You disposed of a number of these notes in the relevant income year.
None of the notes are convertible for the underlying equity interests or have upside returns beyond the stated rate of interest.
The products' International Securities Identification Number (ISIN) country codes confirm that they are foreign sourced products which are cleared through international securities clearing systems.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 855-30
Income Tax Assessment Act 1997 section 960-195
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