Bond Funds Update

An update to my post of 4th February on offshore bonds. I had a chat with someone who knows a great deal more than I do about the correct interpretation of tax legislation.

Their view was that although on a "strict"reading of CTA 2009 sections 490 and 465 it would appear that a dividend from an offshore bond fund is not taxable it is very unlikely that the courts would apply such a strict reading.  Instead they would look to adopt a more purposive approach that would arrive at what the courts and tribunals are likely to regard as the correct position: that is that such dividends are taxable within the loan relationship legislation.  Perhaps on the basis that the dividends are not distributions as per CTA 2010 section 1000.

So, unfortunately perhaps, this is probably more of a curio than a substantive point.