kms

Good morning, I understand that the capital gains tax for a futures contract listed on an approved exchange is equal to the difference between the final account balance and the opening deposit (CG56101), To calculate the CGT when a futures contract is denominated in a foreign currency (say, USD) does one: (i) calculate the difference between the final balance and initial deposit (in USD) and then convert that amount into GBP at the exchange rate in effect on the date the position is closed; or (ii) convert each USD amount (i.e. the initial deposit, any interest due, any dividends received, etc.) used in the calculation of the final balance into GBP at the exchange rate prevailing when that amount was paid/received and then calculate the CGT as set out in the worked examples in CG56101? Many thanks.

Many thanks.

Thank you for the further guidance. My interpretation is that a U.S. Treasury security issued at $100 and that redeems at $100 (i.e., the issue price and redemption price are the same) is NOT treated as a Deeply Discounted Security even if it is purchased in the secondary market at a substantial discount. Can you kindly confirm that my interpretation is correct?

Thank you for your reply and apologies in advance if I'm being stupid but I remain confused. The link you provided appears to define a "deeply discounted security" by reference to the "issue price" ("It is a security where the amount payable on maturity...may exceed the issue price by more than..."). In the example I gave, I indicated that the security was ***issued*** without a discount but I purchased it in the ***secondary*** market at a discount. Can you please explain why the DDS rules apply as indicated by your response that the gain would be taxed subject to SAIM3070 ("Deeply discounted securities: taxation: profit on disposal)? Your guidance is very much appreciated.

Thank you for the SAIM3000 guidance. Can you please provide me with a response to the second part of the query ("is the 3% gain (the difference between purchase price of 96% and sale price of 99%) treated as income or capital gain?")? Much appreciated.

I purchased a United States Treasury Note in the secondary market (not as a new issue) at 96% of par. (At new issue the note was issued at a de minimis discount to par). I sold it at 99% of par prior to the note’s maturity. I had two questions: (i) do the Deeply Discounted Security (DDS) rules apply (i.e., do the rules apply to the secondary market purchase price or just to new issue sale prices)? and (ii) is the 3% gain (the difference between purchase price of 96% and sale price of 99%) treated as income or capital gain? Many thanks. -KS