Taxation of interest on Convertible Notes

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    How is the interest received on Convertible Notes treated for taxation purposes if shares are received in lieu of cash on conversion?

    I found this ATO page but it's not 100% clear.
    https://www.ato.gov.au/general/capital-gains-tax/shares,-units-and-similar-investments/convertible-notes/#traditionalsecurity

    It seems to suggest that the interest isn't taxed as income but rolled up as part of the cost base of the shares.
    https://hotcopper.com.au/data/attachments/3096/3096544-ef3970300bad0a8654cb4a141acec502.jpg
    This seems strange to me as I would have thought it would be taxed as interest income on conversion.
    If it becomes part of the cost base do you then get the 50% CGT discount on it as well?

    I have some convertibles that are being converted next month & the 1 year holding period is around mid June.
 
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