Taxation Treatment of Capital Protected Borrowings

Are you an investor in capital protected products?

At a glance: A guide has been released by the Tax Office to explain the taxation treatment of capital protected products and borrowings.

You should understand how capital protected products are treated for tax purposes or contact us if you require any clarification or advice.

Capital protected borrowings are borrowings usually associated with the purchase of shares in a company, units in a trust or stapled securities such as instalment warrants, where the underlying asset is protected from a fall in value. The purchased securities are then used as security for the borrowings.

The key issues highlighted in the guide include:

 

- What are capital protected products and borrowings?;

- How are capital protected products and borrowings treated?;

- Capital protected products - change to benchmark interest rate.

 

Click here for a copy of the guide at the ATO website at http://www.ato.gov.au

Remember, ensure you are aware of how capital protected products are treated for taxation purposes.