Hi ATO,
Can we please get some clarity on the tax treatment of Australian Govt Bonds purchased via exchange traded bonds (eTBs / eTIBs)?
Most of the existing posts seem to either not address the issue, or add a "seek tax professional" disclaimer, and there doesn't seem to be any authoritative source of information on exchange traded bonds in the ATO website documentation.
Some of the existing posts are quite confusing.
This post below indicates CGT and Coupons are all treated as income for tax purposes for retail investors
https://community.ato.gov.au/s/question/a0J9s00000046EnEAI/p00174795
Whereas these links below indicate there's no special treatment for capital gains or income for govt bonds, which is contrary to the post above
https://community.ato.gov.au/s/question/a0J9s000000QtNNEA0/p00220671
https://community.ato.gov.au/s/question/a0J9s000000RW24EAG/p00225866
I'd like to clarify the tax treatment for retail investors purchasing eTBs/eTIBs of the following Australian Govt Bonds
https://www.australiangovernmentbonds.gov.au/bond-types/exchange-traded-treasury-bonds/list-etbs
Specifically:
- income tax via coupons
- CGT treatment and CGT event dates (hold to maturity, sale before maturity)
Some eTBs such as the ones that mature in November (instead of April), have market pricing that's below the face/par value ($100). My guess is the market prices these eTBs at $90+ dollars on the assumption the return is made on maturity.
As a retail investor, due to the lack of ATO documentation online for exchange traded bonds, its impossible for me to understand whether a person would:
- incur capital gains (or incur losses) when I hold eTBs to maturity
- incur CGT discount after 12 months (this is important for retail investors depending on their individual marginal rate)
I'm trying to work out which eTBs would suit my investment needs based on my marginal tax rate, but with no authoritative information on ATO website on the tax treatment of retail exchange traded AGBs, I cannot make any calculations of my own.
Some popular blogs online also reference these November maturity eTBs here, with assumptions there's capital gains involved on maturity, but so far seems unclear.
[removed by moderator]
The AOFM website says eTBs are an easy way for retail investors to buy a smaller retail-sized amounts of AU govt bonds. There's even a section in MoneySmart website on AGBs and a course for retail investors on AGBs via the ASX website I think.
https://www.australiangovernmentbonds.gov.au/further-info
I think it would be crucial for ATO to close the gap and support retail investors with comprehensive documentation on exchange traded AGBs, so that it's original intention of being accessible to retail investors is fulfilled.
1,812 views
1 replies