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Re: correct inserting of accrued interest on bond sales or purchases in the next TR

Newbie

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I have a portfolio of bonds that produce taxable income at the expiry of the related coupons to be included in the Tax Return at point 10 - L together with bank interest. But, when I achieve purchases or sales on a date other than the coupons expiration, I am charged (on purchases) and credited (on sales) with accrued interest together with the principal amount.  I could not find any information on the ATO website where to enter such accrued interest in the deductions and income sections. Which two fields are respectively correct?

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ATO Community Support

Replies 3

Hello @giorgio51,

Thank you for your question.

 

Can I confirm, when you say: "when I achieve purchases or sales on a date other than the coupons expiration" you mean:

  • when you purchase a bond from someone else before maturity, and,
  • when you sell to someone else before maturity?

If so please see:

If not, could you please provide more information on who you are buying the bonds from and when you are selling? 

4 REPLIES 4

Most helpful response

ATO Community Support

Replies 3

Hello @giorgio51,

Thank you for your question.

 

Can I confirm, when you say: "when I achieve purchases or sales on a date other than the coupons expiration" you mean:

  • when you purchase a bond from someone else before maturity, and,
  • when you sell to someone else before maturity?

If so please see:

If not, could you please provide more information on who you are buying the bonds from and when you are selling? 

Newbie

Replies 0

Hello Kara,

Thanks for answering. I have bought and sold some bonds through a broker so I don't know who the buyer or seller is and, anyway, that doesn't matter. Normally bonds pay interest (coupons) in predetermined periods (month, quarter, semester, year) and when this happens, they are considered fiscally interest to be declared together with bank interest. But if you buy or sell bonds on a day other than the day of payment of the coupon, you will be charged with the principal value and the accrual interest from the initial date of the coupon until the date of purchase (or credited with the two amounts in the case of the sale). In which part of the TR do you have to enter these two "accrued Interests"?

 

Giorgio

ATO Community Support

Replies 1

Hi @giorgio51

 

It depends on whether you have made a net profit or net loss, but it's reported at the same section.

 

If you have made a net profit, it's included on your tax return (supplementary section) at item 24 Other income.

 

If you have made a net loss, it's included on your tax return (supplementary section) at item D15 Other deductions.

 

We cover this on our page for sale or disposal of company bonds and convertible notes.

Newbie

Replies 0

Dear Blake,

 

Thanks so much for the clarification: very useful.


Kind regards,

 

Giorgio