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Edited version of private advice
Authorisation Number: 1051524920582
Date of advice: 31 May 2019
Ruling
Subject: Deductibility of traditional security bonds under section 70B of the Income Tax Assessment Act 1936
Question
Are losses made on selling traditional security bonds deductible under section 70B of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer
Yes
The loss is deductible because the bonds are a traditional security as defined in section 26BB of the ITAA 1936, were sold for cash, were not exchanged for ordinary shares in the company and meet all the other conditions outlined in section 70B of the ITAA 1936.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
In 20XX you purchased traditional security bonds from an overseas bank.
Later in 20XX you sold the bonds back to the overseas bank for cash which resulted in a loss.
You purchased the bonds with the intention of making a profit over a short period of time.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 26BB
Income Tax Assessment Act 1936 section 70B