Capital gains tax on corporate bonds

KEY POINTS

• The recent case of Hancock sheds light on the operation of the rules relating to qualifying and non-qualifying corporate bonds.
• Exemptions and tax deferments apply depending on the type of bond.
• The share capital reorganisation provisions apply to the conversion of securities ‘with any necessary adaptations’.
• A conversion of chargeable securities into QCBs creates a deemed gain that is payable on a subsequent disposal.
• The court adopted a purposive approach to overcome perceived technical shortcomings in the legislation.
• As a result of Hancock the tax treatment of QCBs may now be less certain.

It is often lamented that the advance of texting and social media has led to the unfortunate proliferation of acronyms and abbreviations that now haunt our daily lives. However tax practitioners are no...