Private ruling: Deductibility of traditional security bonds under section 70B of the Income Tax Assessment Act 1936
Date of advice: 31 May 2019
Published: July 2019
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are losses made on selling traditional security bonds deductible under section 70B of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: 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.

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