B44/1993 DATA COLLECTION AND PROCESSING OF SHARES REVIEW FORMS FOR IMPLEMENTATION OF NEW SHARE ASSESSMENT RULES.
DATE OF ISSUE: 3 SEPTEMBER 1993
DATA COLLECTION AND PROCESSING OF SHARES REVIEW FORMS FOR IMPLEMENTATION OF NEW SHARE ASSESSMENT RULES.
TABLE OF CONTENTS
Introduction..............................................................................................3
Background..............................................................................................3
New Rules................................................................................................3
Calculation of a Rate of Return.....................................................4
50% ceiling on Rates of Return....................................................5
Offsetting Negative Rates of Return.............................................5
Deduction of "reasonable costs"..................................................5
Products listed for less than 12 months........................................6
Listing Date...................................................................................7
Exempt Stock Markets..................................................................7
Overseas Shares...........................................................................7
Legislation.................................................................................................7
Who Will Be Affected................................................................................8
Data Collection.........................................................................................9
Target Group.................................................................................9
CMS Cases...................................................................................9
Shareholder Listings.....................................................................10
Shares Review Form...............................................................................10
Processing Timetable..............................................................................10
New PIPS Data Collection Screens & Shares Performance System.........10
Processing Share Review Forms...............................................................10
Urgent Assessments (Increases) Prior to 30 September..........................12
Examples of Processing Different Cases:
1.Reduction in Service Pension..................................................... 13
2.Receipt of Revised Shareholdings Following Return of Share
Review Form............................................................................... 13
3.Sale of Shares............................................................................ 14
4.PIR received after DRI - Increase Owing to Pensioner.............. 14
5.Possible Overpayment................................................................ 14
6.Effect of Death Processing......................................................... 14
7.New Claims Processing............................................................. 15
8.Non Shares Related Automatic Fortnightly Run........................ 15
9.Transfers In and Out.................................................................. 15
Submission............................................................................................... 15
Advices.................................................................................................... 16
Responsibility Based Processing............................................................. 16
Automatic Transfer of Cases Not Data Collected.................................... 16
Overpayments.......................................................................................... 17
Gifting....................................................................................................... 17
Cases Not Sent a Share Review Form.................................................... 17
Non-return of Forms................................................................................. 17
Provision and Ongoing Update of Data.................................................... 17
Advice to Pensioners............................................................................... 18
Statistics.................................................................................................. 19
Implementation / Future Developments.................................................. 19
Attachment A Share Glossary
Attachment B Examples of Contract Notes
Attachment C Legislation
Attachment D Share Review Form and Covering Letter
Attachment E Processing Timetable
Attachment F Outline of New PIPS Screens and Shares Performance System
Attachment G Extract from General Orders Service Pension - Gifting Attachment H FIS Handout
Attachment I DVA Handout
INTRODUCTION
The purpose of this instruction is to provide details of:
-the new policies to be implemented regarding the assessment of shares from 30 September 1993;
-the data collection strategy and timetable; and
-instructions for processing the data collection forms.
BACKGROUND
2.In late 1991 to early 1992 a review of the treatment of various investments under the pension income and assets tests was conducted. This involved the Departments of Finance, Social Security and Veterans' Affairs, in consultation with many pensioner groups and finance industry representatives.
3.This culminated in a report which recommended various options for consideration by the Government. The endorsed changes were announced as part of a reform package included in the 1992 Budget.
4.The changes are to commence from 20 September 1993 and will therefore affect Social Security Age Pensioners from their pension payday of 23 September 1993 and Service Pension assessments from payday 30 September 1993.
5.At the time of issuing this instruction, all directions are current and in line with Government policy and legislation. Note, however, that the changes to share assessments are presently the subject of a review by the Senate Standing Committee on Community Affairs and the outcome will not be known until early September 1993.
NEW RULES
To assist staff in understanding much of the terminology surrounding shares, a glossary can be found at Attachment A.
6.The changes to the treatment of shares involve:
-Calculating a rate of return to determine income earned;
-50% ceiling on the rate of return;
-Offsetting negative rates of return;
-Assessment of securities listed for less than 12 months;
-Deduction of costs such as brokerage and stamp duty;
-Exempt stock markets;
-Overseas shares.
Calculation of a Rate of Return.
7.The assessment of income from shares and other securities listed on the Australian Stock Exchange* is to be done by calculating an annual rate of return based on a share's performance over the previous 12 months.
* refers also to the stock exchanges of Bendigo, Ballarat and Newcastle, as well as "Exempt Stock Markets" (detailed later).
8.The performance will take into account changes in the capital value of shares as well as any dividends, bonuses and rights to shares declared in the previous 12 months. The rate of return formula is almost identical to that used for managed investments:
change in share price over 12 months plus dividends and bonuses x100
share price 12 months ago 1
NB/ When the term "12 months" is used, it actually refers to prices declared 26 fortnights ago.
9.This annual rate of return will be automatically calculated and displayed on the new Shares Performance System. Examiners are not required to calculate this rate manually.
10.The assessable income will then be obtained by applying this percentage rate of return figure to the current market value of shares held. The same share prices will also be used to determine the current asset value of a person's share portfolio.
Example:
Share price 12 months ago$1.20
Current share price$1.65
Increase in share price$0.45
Dividends$0.10
Rate of return:[($0.45 + $0.10) / $1.20] x 100 = 45.83%
Income when rate of return is applied to shares:
$1.65 per share x 45.83% = assessable income of $0.03 per share pf.
11.Although DVA legislation refers to shares listed only on a stock exchange in Australia, it is proposed to amend the Veterans' Entitlements Act (VEA) in the 1993 Budget sittings to allow the new rules to apply to shares and other securities listed on overseas stock exchanges. This will align the VEA with the Social Security Act (SSA).
50% Ceiling on Rates of Return.
12.Where a rate of return is calculated at more than 50% per annum, a ceiling of 50% will be applied. This is a very recent policy decision and as yet, a decision has not been made in respect of whether this 50% maximum cap will also apply to negative rates of return. Once a decision is made, a further instruction will be issued, meanwhile the actual rates of return displayed on the new system will apply.
Offsetting Negative Rates of Return.
13.Negative rates of return calculated for shares (and managed investments) will be allowed as an offset against any ongoing income (due to positive rates of return) from other shares and managed investments.
Example:
Company — No.Price — Rate of return — Income
ABC shares — 1000$2.00- 23%- $17.69 pf
XYZ shares 800$1.25 19% $ 7.30 pf
TOTAL- $10.39 pf
If no other shares or managed investments were held, the total income from shares would be assessed as zero.
If the pensioner also had managed investments in his assessment, the remaining negative $10.39 could be used to offset any ongoing positive income from managed investments.
Deduction of "reasonable costs"
14.Brokerage fees and stamp duty associated with the acquisition and disposal of shares are considered reasonable costs and are therefore allowed to be deducted from any ongoing income from shares and managed investments for a period of 12 months from the date the charges were incurred. (Refer to the glossary at Attachment A for definitions of italicised terms).
15.If a pensioner sells all his shares and there is still a fee amount in the assessment, these fees can be offset against managed investment income, if applicable.
16.If there are no managed investments either, the fee will remain on the system for the full 12 months in case the pensioner invests in either shares or managed investments during the 12 month period in which the fee is allowed as an offset.
Example:
Total fees from various share transactions-$11.90 pf
Total share income $ 8.20 pf
Total managed investment income $9.15 pf
(less MI fees)_______
Total assessable income$5.45 pf
17.Attachment B shows examples of typical contract notes for the purchase and sale of shares through a broker.
Products listed for less than 12 months
18.Where a share or other security has been listed on a stock exchange for a period of less than 12 months, then the rate of return is calculated by the following formula:
change in share price since listing date + dividends and bonuses x 100
share price at listing date — 1
NB/ Refer to paragraphs 23 - 25 for explanation of "listing date".
19.This is exactly the same as for the current managed investment formula where a product has only been available for a period of less than
12 months.
20.The next step in determining the rate of return for managed investments involves extrapolating this figure produced by the formula to calculate an annual rate of return.
Example:
If a managed investment became available 3 months ago and the above formula produced a rate of return of 10% for that period, the annual rate of return for a twelve month period would be achieved by multiplying the above 3 month figure by 4, ie. 10% x 4 = 40% annual rate of return.
21.However, it has been decided that extrapolation will NOT be done for shares that have been listed for less than 12 months. Therefore, using the above example and applying it to shares, the annual rate of return would be 10%.
22.Steps are being taken to apply the same policy to managed investments and staff will be advised as soon as this is finalised.
Listing Date
23.The legislation applies the new rules to shares "listed on a stock exchange..." therefore the last sale price on the first day the company is listed on the Australian Stock Exchange will be used as the starting price when calculating a rate of return for shares and other listed securities less than 12 months old.
24.For consistency, the same policy will soon be applied to those managed investments, such as property trusts, which are listed on a stock exchange.
Exempt Stock Markets
25."Exempt stock markets", such as those operated by building societies, may be run by a broker or company and are not listed on the Australian Stock Exchange. Companies or brokers may apply to the Australian Securities Commission to operate an "exempt stock market". One advantage of this is that it allows companies who wish to trade their shares to do so without having to pay substantial listing costs to the Australian Stock Exchange.
26.As these shares can earn dividends, produce capital growth and can be traded on an exempt stock market, income from these shares will be assessed, from 30 September 1993, under the new rules relating to shares listed on the Australian Stock Exchange.
27.Known examples of companies using an exempt stock market to trade its shares include the Wide Bay Capricorn Building Society, The Rockhampton Building Society (The Rock) and the Mackay Permanent Building Society.
Overseas Shares
28.VEA legislation which comes into effect on payday 30 September 1993 applies the new rules to "shares and other securities listed on a stock exchange in Australia". Budget legislation will remove the reference to "...in Australia" and thereby also apply the new rules to shares and other securities listed on stock exchanges overseas. In the meantime, overseas shares will continue to be assessed under the current rules, where only dividends and bonus shares in lieu of a dividend are assessed as income.
LEGISLATION
29.The legislation covering the changes to the assessment of shares received Royal Assent on 24 December 1992. The changes are contained in the current reprint of the VEA (Issue No. 11, January 1993) and have a commencement date of 20 September 1993. (VEA extracts are at
Attachment C).
30.Section 5J of the VEA has been amended by replacing the previous definition of "investment product" with:
"investment product", in relation to a managed investment or listed security, means all the investments or securities that are:
(a)in or with the same body corporate or in the same trust fund; and
(b) subject to substantially the same terms and conditions as that managed investment or that listed security...".
31.The definition of "listed security" has also been added to section 5J:
"listed security" means:
(a)a share in a company; or
(b)another security;
listed on a stock exchange in Australia..." (will be amended in 93 Budget).
32.Subdivision AA of Division 8 of Part 3 of the VEA is now headed "Managed investments and listed securities". Section 46AA has been extended as follows:
" (2)This subdivision applies to an investment in the form of a listed security.
(3)This subdivision does not apply to bonds and debentures."
33.The following Subdivisions cover the rules relating to the ongoing assessment of income from managed investments and listed securities:
S.46AB and S.46AC detail the calculation of positive and negative rates of return and offsetting between these negative and positive returns.
S.46AD and S.46AE define and explain the use of the previous
12 months' performance in calculating an annual rate of return. S.46AE will need to be amended as extrapolation will not be used in cases where a share has been listed for less than 12 months.
S.46AF authorises that reasonable costs involved in the acquisition and disposal of shares may be offset against ongoing share and managed investment income.
S.46AG restates that actual returns on ongoing managed investments and shares are not considered income.
WHO WILL BE AFFECTED
34.All service pensioners with shares currently recorded on PIPS should be reassessed under the new rules for payday 30 September 1993. As at August 1993 when the extract for the setting up of CMS cases was done, there were 21,832 assessments with shares Australia-wide. (See table overleaf for numbers in each state).
STATEMAX RATEREDUCED RATETOTAL
NSW — 3283 — 3139 — 6422
VIC — 2480 — 2717 — 5197
QLD — 2276 — 2151 — 4427
SA — 1202 — 1273 — 2475
WA — 1376 — 1193 — 2569
TAS — 360 — 382 — 742
_____
NATIONAL — 21832
DATA COLLECTION
Target Group
35.All service pensioners who have shares identified in their pension assessment (the numbers have been supplied above) have been sent a Shares Review form to update records of their shareholdings and to allow pensioners to include the brokerage and stamp duty they have incurred in the past 12 months.
36.Shares Review forms were sent during the week of 16 August 1993 to all service pensioners who have shares identified in their pension assessment. It is anticipated that all pensioners will have their forms by 20 August 1993.
CMS Cases
37.All pensioners who were sent a data collection form will be identified under the CMS network with one of two dates:
17 August 1993 for all pensioners currently on maximum rate pension; or
18 August 1993 for all pensioners currently on reduced rate pension.
38.No attributes have been set under these DRI cases, so identification and statistical information requests must be extracted by including the appropriate date sent/issued field (Registration Status) for CMS Statistical Reports.
39.All cases will be in Form Sent (FS) status and a case registered for each assessment.
40.The use of the two registration dates to identify maximum and reduced rate cases should assist Branches in sorting and prioritising the workload resulting from this exercise.
Shareholder Listings
41.In addition, a hard copy listing will be provided of all pensioners sent a Shares Review form, detailing their shareholdings as shown on the PIPS Shares screen. This list will be in alphabetical order and will show only two assessments per page. This list was requested as it may be useful to attach the details to the incoming Share Review forms for examiners to quickly compare existing share details with those declared on the Shares Review form.
42.Another feature to assist in prioritising work quickly, is the inclusion of an asterisk in the address block of the Shares Review form. The asterisk highlights maximum rate cases only.
SHARES REVIEW FORM
43.Attachment D is a copy of the actual Shares Review form and covering letter to be sent to pensioners by the mailing house. The form is hopefully self-explanatory to pensioners, especially with the examples included below each question.
44.Multiple copies of these forms have been sent to each Branch Office to use with new claims, or where another form is requested by a pensioner.
PROCESSING TIMETABLE
45.A flowchart outlining key dates and events is at Attachment E.
NEW PIPS DATA COLLECTION SCREENS & SHARES PERFORMANCE SYSTEM
46.Attachment F outlines the new screens and how to navigate around these. The IPOs have already attended a training course held in Central Office on 20 - 21 July and training of all staff involved in the processing and recording of shares details on the PIPS screens has also been completed.
PROCESSING SHARES REVIEW FORMS
47.The various shares and other securities detailed on the Shares Review forms will need to be data collected onto the appropriate screens and processed for the advance payday of 30 September 1993 (pay period 33). This date should be set whist accessing the Assessment Control (PP.AC) screen and examiners should ensure that upon submission, the PP.SU screen shows day 1 of pay period 33.
48.During the data collection period, the current PIPS Shares screen (PP.SH) will become known as Previous Shares (PP.PS) and will only allow the Delete action to function. Change and Add facilities will no longer operate.
49.The following is a list of probable company and security types that may be encountered and explanation of which screens should be used for recording these:
Ordinary Shares — These are the most common listed securities and
(Fully or Partly-Paid)should be data collected onto the new PIPS Share
Preference Shares — screen (PP.SH). This is done by selecting the
Convertible Notes — particular security from the Shares Performance
Exempt Stock Market — System (SPS) using the Share Search screen
Securities(PP.SS) and placing "A" in the ACTion field next to
the chosen security.
Options The rate of return for these securities will be
Futures calculated manually by DSS. For this reason, they
Overseas Securities will not initially be found on the SPS but they will
need to be recorded on the current Other Assets
screen (PP.OA) under the category code of "OS"
for overseas shares and "SH" for all others. Any
shares recorded on the PP.OA screen will
continue to be assessed under current pre-
September 1993 rules.
Private Company Shares — As these are not listed on a stock exchange, they
Unlisted Shares — will have to be recorded on the Other Assets
screen (PP.OA) under the category code of SH.
50.Other security types that may be declared on the Shares Review form and which will be held on the Shares Performance System include:
Vendor Ordinary
Employee Ordinary
Cumulative Preference
Cumulative Redeemable Preference
Cumulative Redeemable Convertible Preference
Cumulative Convertible Preference
Convertible Preference
Convertible Redeemable Preference
Redeemable Preference
Part Preference
Redeemable Part Preference
Cumulative Part Preference
Cumulative Redeemable Part Preference
Cumulative Redeemable Convertible Part Preference
Employee Preference
Cumulative Part Employee Preference
51.It is required that examiners keep a record of any options and futures listed on the Shares Review forms they handle. Rather than keep a manual record, it would be easier to simply do a screen dump of the PP.OA screen for any cases where options or futures are recorded. These should be centrally stored and forwarded to Central Office on a fortnightly basis. This information will assist us in developing appropriate policies relating to the future assessment of these types of securities.
52.Once all the share details from the Shares Review form have been keyed onto the system, advices for all cases processed prior to 13 September 1993 must be manually suppressed. The reason for this action is the same as for any cases processed for a Statutory Increase - the new pension rates generated by the submission would be incorrect until updated by Day 1 Processing for pay period 33.
53.For any cases processed on or after 13 September 1993 (for payday 30 September), daily advices produced would have to be held, in line with normal processing arrangements, until after the release of the quarterly advice for payday 30 September 1993. Pensioners will therefore receive two different letters regarding pension rates for payday 30 September.
54.It is suggested the following wording be included in those daily advices that are produced on or after 13 Spetember 1993:
"Since sending you a letter dated 13 September 1993, your Shares Review form has been processed, resulting in the previously advised pension rate for payday 30 September 1993 being amended."
55.Upon submission of cases that involved using the Shares Performance System to add listed securities to the PP.SH screen, the old shares details held on PP.PS will automatically be deleted. This information can only be retrieved if Submission is cancelled and the case is returned to Investigation Status. A hard copy of the old information held on PP.PS should therefore be attached to the Shares Review form for reference purposes.
URGENT ASSESSMENTS (INCREASES) PRIOR TO 30 SEPTEMBER
56.The reason for still allowing shares to be deleted from PP.PS is to enable processing of cases where shares should no longer be held in the assessment. This function will also enable processing of urgent PIR cases containing shares where it was felt that the pension increase should be processed urgently prior to payday 30 September.
57.In summary, if there are no longer any shares in the assessment, ie. all sold, then all shares on PP.PS can be deleted and the case submitted for the payday following receipt of notification. Examiner and Delegates' discretion should be exercised regarding any follow up of other income and asset details as a result of the sale of shares.
NB/ If there are no shares, but the pensioner has declared fees incurred during the previous 12 months, then the fees must be recorded on the PP.FE screen and can be offset against managed investment income. This applies even if there is no managed investment income as the pensioner may again invest in shares or managed investments within 12 months of incurring the fee.
58.If shares are still held by the pensioner, but these are unchanged, then details should be left on PP.PS and other details updated as necessary (FI, IN, etc) and submit for the appropriate payday. Once this case is through PY status, share details must then be data collected onto PP.SH and PP.OA as appropriate for payday 30/9.
59.If shareholdings have changed, then all shares recorded on PP.PS should be deleted and share income and asset values calculated under current rules. These income and asset figures should be recorded on PP.OA and other details updated as necessary (FI, IN, etc) and submitted for the appropriate payday. Again, once the case is through PY status, share details must then be data collected onto PP.SH and PP.OA as appropriate for payday 30/9.
EXAMPLES OF PROCESSING OF DIFFERENT CASES
Example 1: Reduction in service pension
60.Pensioner returns 'Share Review Form' on 25 August 1993, information disclosed on form will result in a reduction in service pension rate. Pay date for effective reduction will therefore be 30 September 1993. Service pension action can be submitted with an advance pay period reduction for pay period 30 September (33, day 1). Advices should be manually suppressed.
Example 2: Receipt of revised share holdings following return of Shares Review Form
61.Pensioner returns 'Share Review Form' on 26 August 1993, information disclosed on form will result in a reduction in service pension rate, case submitted for reduction for pay period 30 September. Pensioner then writes to Department 3 September to advise the sale of some share holdings and insists on re-assessment of service pension. As no re-assessment during data collection period, case would have to be adjusted according to the latest information for payday 30 September. A retrospective arrears calculation would have to be made taking into account all financial circumstances. Maximum arrears in this instance would be for pay periods 16 September (32) and 30 September (33).
Example 3: Sale of shares
62.Pensioner returns 'Share Review Form' on 27 August 1993, information disclosed on form will result in a reduction to service pension entitlement, case submitted for reduction for pay period 30 September. Pensioner then writes to Department 6 September to advise the sale of all share holdings. Case is re-assessed for payday 30 September - after update, arrears payable if appropriate from first pay day after notification of change.
Example 4: PIR received after DRI - increase owing to pensioner
63.Pensioner returns 'Share Review Form' on 30 August 1993, information disclosed on form will result in an increase in service pension rate as the pensioner has reduced overall investments. Case submitted is re-assessed for update of circumstances, ie shares, for pay day 30 September (33, day 1). Case then referred to teams for manual action to calculate arrears payable from pay date after 30 August with arrears for shares calculations being made under current rules and methodology.
Example 5: Possible Overpayment
64.Pensioner returns 'Shares Review Form' and an obvious overpayment of service pension is detected. Examiner to submit case for reduction for payday 30 September and refer to Review staff for investigation. Screen dumps of existing shares screen information should be attached to the service pension authority. Effective date for overpayment, if applicable, would be up to the date of service pension reduction as per existing overpayment re-assessment guidelines.
Example 6: Effect of Death Processing
65.Pensioner returns Shares Review Form on 23 August and information disclosed is data collected and case submitted on 25 August for
30 September. Pensioner dies on 27 August. Automatic Death Processing System would not be able to update record due to shares data collection case being in frozen status awaiting day 1 processing for pay period 33 (PY status). Delegate would have to cancel determination and the examiner cancel their submission.
66.The date of death would need to be removed from the CDB to allow the shares data collection action to be returned to registration (RG) status. When this has been done, the date of death must be re-entered on the CDB. If there is a surviving partner in the assessment, shares should be re-data collected at a later pay date following the bereavement period (unless transferring to DSS).
NB/ Death Processing action will result in the automatic deletion of the deceased partner's income and assets and the halving of joint income and assets, but will still maintain the full fee amount as a deduction against share and managed investment income.
Example 7: New Claims Processing
67.If a New Claim for service pension is required to be determined and payment initiated prior to 30 September and the claimant has assessable listed shares, the New Claims Examiner will have to manually calculate the income, as per current assessment rules and methodologies, and record a total shares asset and income value on the Other Assets PIPs screen (PP.OA). The submitted authority should be endorsed "interim pending shares data collection" and referred after interface for update of the shares data collection screen and resubmitted for 30 September or a later date as appropriate.
Example 8: Non shares related automatic fortnightly runs
68.There is a possibility that some data collected cases awaiting interface for 30 September will be subject to fortnightly re-assessment, ie. deprived assets update or managed investment fortnightly runs. In the event of such a case occurring the delegate could elect to either cancel determination and have the examiner cancel submission and resubmit after updating the fortnightly run information or alternately, leave the fortnightly run in abeyance until after day 1 processing for 30 September. Whatever the choice made, delegates will need to consider the advices impact of any decision.
Example 9: Transfers In and Out
69.Transfer cases involving shares may be affected by the shares data collection exercise if cases have been submitted for transfer in on a date prior to 30 September. In such cases, the shares details would need to be recorded on the Other Assets screen until post interface update and the share recorded on the data collection screen. Transfers in or out for payday 30 September or later should not be processed until after the Statutory Increase and Shares Implementation production run, when the new assessment rules will be operational.
SUBMISSION
70.Whether submitting data collection cases as DA for 50 (variation), or as RC for 10 (continuation), the pay period must be set for 30 September or a later date.
71. All DA for 50 cases submitted prior to 11 September for pay day
30 September will not show the correct "on - off" rates applicable for that date. This is unavoidable as the rates of return that will apply to the assessment will be those calculated in July/August. Although these may be indicative of the rates to actually apply for payday 30 September, they will definitely produce incorrect pension rates.
72.In addition, the "on - off" rates will also not reflect the impact on the assessment of the 30 September Statutory Increase, Managed Investment global run, Rent Assistance indexation and Assets Taper Rate adjustments.
73.As with other processing that occurs just prior to a Statutory Increase, etc. where "on - off" rates are incorrect, the authority should be endorsed with appropriate wording. In this instance, authorities may be endorsed with "DATA COLLECTION ONLY".
ADVICES
74.All cases submitted prior to 10 September for the 30 September payday must have advices manually suppressed. This is due to the same reasons as described above and the fact that the advices would be incorrect. The quarterly advice produced for the 30 September payday would supersede these.
75.For cases submitted after the weekend of 11/12 September (Production run for Statutory Increase, shares assessment changes, etc), daily advices will reflect correct pension rates and financial details. Therefore, in line with normal processing arrangements, these should be held until after the release of the quarterly advice for 30 September. (Refer also to paragraphs 54 and 55).
RESPONSIBILITY BASED PROCESSING
76.During the IPO training course, the level of delegation required for the data collection cases was raised. It was felt that cases being submitted for data collection only could be determined by officers below the ASO5 level, but as arrangements in relation to other cases would vary between Branch Offices, depending on operational requirements, this should be a matter for Income Support Managers to decide.
AUTOMATIC TRANSFER OF CASES NOT DATA COLLECTED
77.As the current shares screen (PP.PS) will become obsolete from 30 September, all data still not processed through the data collection exercise and transferred to the new PP.SH screen will automatically be moved to the PP.OA screen.
78.It is intended to build another screen (possibly known as "Other Shares") and to automatically transfer all the shares data from PP.OA onto it. Further details regarding this issue will be advised after the implications of doing this for either 30 September or leaving it for a later payday are investigated.
OVERPAYMENTS
79.All Share Review forms received are to be processed before the cut-off for payday 30 September 1993. Any cases not updated for payday
30 September 1993 will remain assessed under the old share rules until the review form is actually processed. These should be processed for the next payday. However, where pension rate reduces solely due to the application of the new rules, no overpayment has occurred.
80.Should a pension reduction occur due to large variations in shareholdings or changes in other circumstances, then normal "possible overpayment" investigation may be required.
GIFTING
81.In line with current legislation and policy, pensioners may gift assets to the value of $10,000 without any adverse affect on their pension. If shares valued above the $10,000 gifting limit are disposed of without adequate consideration, the income that would be assessed on the excess gifted amount would be calculated based on the rate of return for the gifted shares. (Refer to Attachment G for GOSP guidelines regarding gifting).
CASES NOT SENT A SHARE REVIEW FORM
82.Some pensioners with shares in their assessment would not have received a review form due to "address unknown" or having overseas addresses. A listing of these has been provided to the IPO in each state to be followed up according to normal Branch Office procedures.
NON-RETURN OF FORMS
83.If all Share Review forms are not returned by the implementation date, the options include sending reminders, or data collecting existing details of shareholdings onto the new shares screen. (Daily Advices would need to reflect the fact that this has been done, even though the data collection form was not returned). An appropriate strategy will need to be decided based upon the numbers of outstanding forms and the accuracy of current share data held on the PP.PS screen.
PROVISION AND ONGOING UPDATE OF DATA
84.A Melbourne-based company, Information Express, will be the data providers for all share rates of return and associated calculations. They will provide data to DSS, who will then add any manual overrides to rates of return and pass this on to DVA. The DVA database managers, based in the Sydney Branch Office, will also have the ability to amend any information to be stored on the Shares Performance System.
85.Data used will be extracted from the Australian Stock Exchange (ASX) at close of trading every second Wednesday. This will be provided by the Friday of that week to DSS, who will adjust it accordingly and pass it on to DVA by the next Tuesday for update of the Shares Performance System on the Wednesday/Thursday.
86.Although the Shares Performance System will be updated every fortnight, the new rates of return will only be applied to pension assessments at each quarterly global update. The reason for updating the Shares Performance System every fortnight is to enable any new grants or pension reassessments processed in between the quarterly updates to use the most recent figures available.
87.Staff should note that Information Express "own" the rate of return figures through copyright and therefore the practice of providing some financial advisers, etc. with a complete set of managed investment rates of return will not be appropriate for shares. All requests for bulk details of share performance data should be referred to Investment Policy Officers in the first instance. Further details will be provided to IPOs and those staff likely to be approached for such information, in relation to handling such requests.
ADVICE TO PENSIONERS
88.Staff may receive enquiries regarding how to complete the Share Review form and also about the effect of the new rules on an individual's pension rate. It should be understood that even if data collection has been completed on a case, the pension rate on the trial screen will be based on current rules and will therefore be incorrect for payday 30 September. The pensioner should not be advised of this rate. (Refer to paragraphs 70 - 75).
89.A "Question and Answer" guide has already been issued to Branch Offices to assist in dealing with pensioner enquiries. This may still be used and may soon be added to in order to remain current with changing issues.
90.The covering letter attached to the Share Review form advises pensioners to contact either their DVA Branch Office, or their local Social Security Financial Information Service (FIS) officer if they have any questions. Where a pensioner requires a detailed explanation of how the changes will affect their circumstances and discussion on possible options, a referral to FIS would be appropriate.
91. A copy of a FIS handout for pensioners is at Attachment H.
A version adapted for DVA use is at Attachment I.
STATISTICS
92.The following statistics should be kept throughout the data collection period. The details relating to pensioner enquiries will assist us to more accurately factor this aspect into our project costings in future and will be included in the project evaluation. It will also be a useful guide for Branch Offices in allocating resources for any similar exercises.
93.Statistics required:
Enquiries
-telephone/counter;
-number per day;
-average length of time answering enquiry;
-total time spent per day answering enquiries;
-type of enquiry (protest, effect on pension rate, methodology, etc).
Cases referred to normal processing area
-number of cases per day;
- type of case (pension increase with arrears, possible overpayment, PIR outstanding, etc)
IMPLEMENTATION / FUTURE DEVELOPMENTS
94.As highlighted throughout this instruction, certain policies and legislation relating to the assessment of shares are still being finalised. IPOs should be the first point of contact when seeking clarification on issues, as they are liaising directly with Central Office. Further instructions will be issued regarding any developments and to provide specific information regarding actual implementation for 30 September 1993, including the automatic transfer of shares data from PP.PS to PP.OA and an update on the processing timetable for the quarterly run.
NATIONAL PROGRAM DIRECTOR
BENEFITS
THESE ATTACHMENTS HAVE BEEN REKEYED TO ENABLE IT TO BE INCLUDED ON "THE GENERAL"
Attachment A
SHARE GLOSSARY
NB. THE FOLLOWING GLOSSARY OF TERMS IS FOR INTERNAL STAFF USE ONLY. STAFF MAY FIND IT HELPFUL AS AN AID TO UNDERSTANDING THE TERMS USED IN CONNECTION WITH ASSESSING SHARE INVESTMENTS, BUT MAY NOT RELEASE IT TO THE PUBLIC.
ACN
Australian Companies Number. This unique identification number is assigned by the Corporate Affairs Commission when a company is successfully registered.
Companies are required by law to quote their ACN on all correspondence.
ACX
Australian Stock Exchange code. This is a unique code assigned by the ASX whenever a security is listed on the exchange for trading. The ASX code, if known, can be used to uniquely identify a listed security and locate its performance details on the S&I screen.
ALL ORDINARIES INDEX
This is a stock exchange measure which averages the movements or market prices of approximately 300 Australian Companies. Similar indicies are calculated for other markets. eg. the All Industrials Index and the Resources Index.
Similar Overseas indicies are the Standard and Poors Index (New York), the Financial Times Index (London) and the Nikkei Index (Tokyo).
The All Ordinaries Share Price Index measures only the capital gain or loss resulting form share price movements. It does not include dividends.
The All Ordinaries Accumulation Index does include dividends and therefore measures the overall return to investors.
ARBITRAGE:
A gain derived from taking advantage of price variations in different markets but for the same article or commodity, ie, buying in one market at a lower price and selling it in another at a higher price. Arbitrage arises in currency, share and commodity markets.
ARTICLES OF ASSOCIATION:
A document drawn up at the foundation of a company and usually attached to the Memorandum of Association in order to register the company.
This document contains the rules for managing a company.
The articles of association constitute the contract regulating the internal management of the company.
They contain regulations relative to the holding of meetings, voting there at, appointment of directors, calls on shares, transfer of shares, dividends, accounts, audit, and other matters of an "internal" nature. They are, in essence, the rules and regulations governing the domestic relationship of the company, its members and directors.
See also Memorandum of Association.
ASSET BACKING:
Net assets of a trust or company (in dollars) divided by the number of units or issued shares.
ie. Net Asset of a Company
------------------------ = Asset Backing
No of Ordinary Shares
ASSET REVALUATION RESERVE:
A company's profit is usually calculated with regard to the normal trade of that company, ie, comparing sales revenue to the cost of the goods that are sold. However, it is possible for a company to make a profit as a result of increase in the value of its assets. For example, a company which manufactures nails will make a profit by the manufacture and sale of those nails, however, a profit can also be made if the buildings in which those nails are made increase in value. This would be a capital profit.
Capital profits made by revaluation of assets are usually transferred to the Asset Revaluation Reserve where they can be retained for an indefinite time before distribution.
Distributions from Asset Revaluation Reserves are income for departmental purposes and are assessed like other distributions of profit (dividends).
ASX
Abbreviation for Australian Stock Exchange.
AUTHORISED CAPITAL:
This is also known as nominal capital and is the term used to describe the maximum amount of shares which a company is permitted by its rules to issue.
The Articles and Memorandum of Association of a company specifies the maximum number of shares that the company can issue and the par value of those shares. That is, a company may be authorised to issue $100,000 shares at 50c par value. The authorised capital is therefore $50,000.
A company's authorised capital may and frequently does exceed the called up capital of the company (see also called up capital).
See also (i) Articles of Association (ii) Called up capital (iii) Memorandum of Association
BID AND ASK
Buy and sell. Bid price is the price offered; the ask price is the price requested.
BOND
A security issued by a borrower (generally government or semi-government authorities) in return for money from an investor. The principal is repaid on a fixed date and fixed interest paid on the full term of the bond. They are generally medium to long term fixed-interest securities, eg. Australian Savings bonds (small investors/general public) and Commonwealth Treasury bonds (large investors). Although some bonds can be traded on a bond market, they are not a 'listed security' and are not assessed under the Shares Rules.
BONUS ISSUE - SHARES AND OPTIONS
These are shares or options issued to existing shareholders of a company in proportion to their shareholdings.
For example, a 1 for 5 bonus issue means that shareholders receive one free share for every 5 they already hold.
They are free, as their name suggests; no cash changes hands They may be used by the company to supplement dividends.
For DSS purposes the par, or face value of the bonus share is treated as income unless that share is paid out of a genuine share premium reserve.
Bonus issues usually alter the share structure of a company and cause a dilution factor to be calculated.
See also (i) Options (ii) Shares (iii) Share Premium Reserve
BROKERAGE
This is a fee charged by stockbrokers for buying and selling shares on behalf of a client. It is usually charged at a rate of around 2 - 2.5% of the value of the transaction, although a minimum set fee may be charged, or larger transactions may be charged a lower percentage. Brokerage is not usually charged on applications for new shares made through a broker as the company often pays the broker a fee for issuing the prospectus in the first place.
Brokerage would not be paid where shares are sold "off market", ie. not through a broker. In addition, some companies have dividend reinvestment plans which automatically issue new shares instead of dividends which incur no brokerage or stamp duty.
CALL
When shares are issued as partly paid, shareholders pay only a portion of the par or face value of the share. The company is then able to call up all or part of the unpaid balance of the share at a future date. Calls are also made on contributing shares.
CALL OPTION
The right for a fixed period of time to buy a share at a predetermined price.
See also Exchange-Traded Options.
CALLED UP CAPITAL
Newly issued shares are sometimes paid for in several instalments, or calls. The called-up capital is the total amount of instalments so far due from all shareholders.
See also (i) Authorised Capital (ii) Paid up Capital
CAPITAL BASE
The issued capital of the company, that is the money contributed by the shareholders who first acquired shares in the company, plus reserves and retained profits.
CAPITAL GAIN
The profit made from selling an asset - sale price minus purchase price.
For Social Security purposes a capital gain is the increase in capital value of a share or other security over a twelve month period. This capital gain is then used in a formula to arrive at a 'product rate of return' which is assessed as income whether or not the capital asset has been sold.
See also (i)product rate of return and (ii) assessable income.
CAPITAL RECONSTRUCTION
When a company changes its issued capital, it reconstructs the face value of its shares. eg. If you have 2 shares at $0.50 cents each they now become 1 share at $1.00 each.
COMPANY
Any two people can form a private company for lawful reasons. The formation of a public company requires five people. Companies can be in a variety of forms.
(a) A company limited by shares is the most common type, in which the shareholders' liabilities are limited to the amount of the unpaid shares.
(b) A company limited by guarantee is generally used for clubs in which members' liability is limited by the company's memorandum of association to an amount that has to be contributed should the company be would up.
(c) A company limited by shares and by guarantee imposes a double liability on the shareholders, as they must contribute the value of the unpaid shares as well as whatever amount is specified in the memorandum of association should the company fold.
(d) A unlimited company is an incorporated partnership in which the members are not limited in their liabilities.
(e) A no-limited company is one in which shareholders are not bound to pay calls on their shares. This construction is restricted to mining companies.
(f) A proprietary limited company (private company) is limited to no more than 50 members and operates with restricted right of transfer of shares. A proprietary limited (Pty Ltd or P/L) company can neither invite the general public to subscribe for its shares nor take deposits from the public.
COMPANY OPTIONS
Additional shares on offer to a shareholder from a company.
CONSUMER PRICE INDEX
A measurement, taken four times a year (in the December, March, June and September quarters), of movements in the prices of a fixed list of goods and services.
CONTRACT NOTE
Confirmation sent from broker to client detailing the purchase or sale of shares carried out on the client's behalf.
CONTRIBUTING (OR PARTLY PAID) SHARES
A contributing share is a share which is not paid up to its par value (only part of the capital amount and any premium due has been paid). When the company issues new shares it may not require the full payment for the shares immediately so it will issue the shares on a contributing or partly paid basis. The company will make a call in the future for a part or all of the remaining amount.
In a limited liability company (Ltd) a holder of contributing shares is legally obliged to pay any call. Contributing shareholders in a no liability company are not legally obliged to pay calls.
Contributing (or partly paid ) shares are a listed security for DSS purposes.
See also (i) Called-up Capital (ii) Limited Liability Company (iii) No Liability Company.
CONVERTIBLE NOTE
A fixed interest security which allows an investor the option of converting the note into cash or fully paid ordinary shares on a given date. Are a listed security for DSS purposes.
It is an unsecured loan so ranks after secured loans and before preference and ordinary shares for claims on company assets.
The note can be traded on a stock exchange, so is assessable as a listed security for income test purposes.
The market value of convertible notes on the stock exchange rise and fall in association with (a) the current interest rate relative to that of the note; and (b) the price of the ordinary shares into which they can be converted.
CONVERTIBLE REDEEMABLE PREFERENCE SHARES
May be redeemed (eg for cash) at face value on a given date. Similar to convertible notes except that they rank after convertible notes should the issuing company be wound up.
CUM DIVIDEND/CUM RIGHTS
"Cum" means with. Therefore, a share is cum dividend (or cum div) if the purchaser is entitled to receive the next dividend payment. This is normal. The opposite is ex dividend, which may apply for a short period around the dividend date. In this case, the seller intends to keep the next dividend, presumably to be received soon.
The term cum is also used in relation to bonus issues and rights issues.
CUMULATIVE SHARES
See Shares.
DATE INCURRED
Refers to the settlement date of a share transaction, which is actually 5 days after the transaction (known as "T plus 5"). Brokerage fees and stamp duty will therefore be incurred 5 days after the date of trade (ie. date sale/purchase is contracted) and can be allowed as a deduction from that date.
When a transaction occurs through a broker, the broker is required to send their client a contract note on the day of the trade. This will contain details of the:
-trade date;
-number and type of shares bought/sold;
-amounts of brokerage and stamp duty payable; and
-the date these amounts are payable (or, in the case of a sale, the settlement date - which equals T+5).
If the pensioner operates an account with the broker, then evidence of payment of brokerage and stamp duty will show in the account statements.
If the pensioner does not operate an account (and this is the most likely situation for pensioners), then no "receipt" is available to show payment of brokerage or stamp duty, apart from the contract note. If the pensioner has bought shares, the evidence of payment is in the fact that share certificates are issued in the pensioner's name, or if done electronically, a Flexible Accelerated Security Transfer (FAST) system printout is issued.
DEFERRED DELIVERY
Can occur when a company reconstructs its share capital. This term is then used to describe shares for which the scrip has not yet been issued. The shares are tradeable, but buyers will have to wait for the share certificate.
DEFERRED DIVIDEND SHARES
Purchased by investors on the understanding that they will only receive dividends after a specified date. These shares will rank after ordinary shares until their entitlement to dividends start. Companies might offer deferred dividend shares if they were incurring losses or wanted to utilise funds elsewhere.
DELIST
A company is delisted when its shares are permanently removed from a stock exchange listing, because it no longer complies with stock exchange listing requirements, for example if the company is taken over.
DILUTION FACTOR
A Dilution Factor is used when it is necessary to adjust a share's historical price to make it comparable with a share's current price. This can happen when a company issues bonus shares or rights issues which dilute the market value of the shares originally issued. Dilution Factors may also be applied to past dividends and can occur with share splits and capital reconstructions.
DISCOUNT
Generally meaning a deduction from the face value of a security, ie the opposite of premium.
See also (i) Face Value (ii) Premium
DIVIDEND
A payment to shareholders from a company's after-tax profits. Dividends may be expressed as a percentage rate on the paid value of the shares or may be a specified amount per share. They are issued on a 'per share' basis and usually amount to 50-75% of the profit earned during the year with the balance reinvested in the company.
Dividends can be paid twice per year. An interim dividend based on the results of the first six months, and a final dividend based on the outcomes of the full year which also takes into account the interim dividend already paid.
ie. Interim dividend + final dividend = Dividend per share (DPS)
Dividends are included in the Social Security 'product rate of return' calculation which is used to assess income from listed shares.
DIVIDEND COVER
The number of times that the most recent annual dividend could have been paid out of the most recent profit. It gives an indication of how secure future dividend payments are. It is calculated by dividing the net profit by the amount paid in dividends, or by dividing the earning per share by the dividend in cents per share.
ie. Earnings per share
------------------- = Dividend Cover
Dividend paid
DIVIDEND IMPUTATION
A system introduced by the Federal Government on 1 July 1987 under which shareholders receiving dividends from a company may be entitled to a credit for the Australian tax paid by the company on its income.
Under the dividend imputation system dividends will be taxed only once, either by the company or, if the company does not pay tax, by shareholders who receive the dividend. Shareholders will pay the tax at the relevant individual marginal rate. This system can result in tax "credits" in certain circumstances.
The imputation system has no implications for Social Security. The value of the dividend is income for pension and benefit purposes, and any imputation or resultant credits are ignored by this Department.
See also Fully Franked Dividends, Partially Franked Dividends and Unfranked Dividends.
DIVIDEND RATE
Where the dividend is expressed as a percentage of the par (or face) value.
ie Dividend per share 100
------------------- x ---- = Dividend Rate
par value 1
DIVIDEND REINVESTMENT SCHEME
A scheme by which shareholders may elect to receive dividends in the form of shares instead of cash.
DIVIDEND YIELD
The theoretical return on an investment, assuming shares are bought on the market at the prevailing price and not taking into account changes such as brokerage. It is calculated by dividing the dividend per share by the current share price, expressed as a percentage.
ie Dividend per share 100
------------------- x ----- = Dividend Yield
share price 1
EARNINGS PER SHARE (EPS)
The most recent year's total net earnings (or profit) dividend by the number of ordinary shares. Note that earnings per share are normally higher than the dividend per share. For example, a company may earn 20c per share but only pay a dividend at 15c per share.
ie. Net profit
----------------------- = Earnings per share
No of ordinary shares
The EPS shows the growth in earnings from one year to the next.
EARNINGS YIELD
The earnings per share dividend by the market price.
ie Earnings per share 100
------------------- x ---- = Earnings Yield
market price 1
See also (i) price-earnings ratio
ENTITLEMENT ISSUE
Like a rights issue except that the right cannot be sold to a third party. Shareholder has the option to take up the offer or let it lapse. Entitlement issue may be offered on a pro-rata basis ie 1 for 3 shares held.
EQUITY
The residual value of a company's assets after all outside liabilities (other than to shareholders) have been allowed for, ie net asset value. Can also be considered as another term for share.
EQUITY TRUST
An unit trust which invests pooled savings only in equities, or shares.
EX DIVIDEND/EX RIGHTS
See cum dividend/cum rights.
EXEMPT STOCK MARKETS
Exempt stock markets may be run by the company itself or set-up by a broker. Companies or brokers may apply to the Australian Securities Commission to operate an exempt stock market. This allows companies who wish to trade their shares to do so without having to pay substantial listing costs to the ASX.
As exempt stock market shares are being traded on a stock exchange, for Social Security purposes income from shares traded on an exempt stock market will be assessed in the same way as income from shares traded on the Australian Stock Exchange.
EXCHANGE TRADED OPTIONS
A type of option bought or sold on the options market. Are a listed security for DSS purposes.
FACE VALUE
Also referred to as Par or Nominal value.
The face value of a fully paid share is the price at which it was first issued to the public.
The face value of a security or share bears no relationship to the market value.
FLOOR PRICE
The level below which the price of a commodity or security will not fall because no seller will accept less, for example the reserve price at an auction.
FLOTATION OF SHARES
When a company floats it's shares it is offering shares to the public to raise cash.
FRANKED DIVIDENDS
Dividends that have been paid out company profits that have been taxed at the full marginal tax rate are said to be "franked".
Franked dividends attract tax advantages under the Dividend Imputation system.
Franked dividends hold no implication for Social Security, the dollar value of the dividend is income for departmental purposes.
Franked dividends are said to be fully franked if all the company tax has been paid on the income which went into the dividend, partially franked if part of the tax has been paid and unfranked if no tax has been paid.
See also(i) Dividend (ii) Dividend Imputation.
FULLY PAID SHARES
Shares which have been paid for up to their face value. There are no further calls allowed on these shares and so no further liability exists.
See also(i) Authorised Capital (ii) Called Up Capital.
FUTURES
Are contracts based on possible future prices. Are not listed on the Australian Stock Exchange, but on the futures exchange. Are a listed security for DSS purposes.
GEARING
The relationship between a company's shareholders funds and outside borrowing. Gearing is usually expressed as ratio (or debt/equity ratio). A company is highly geared and therefore riskier for investors if borrowed funds are high in relation to shareholders funds.
HOLDING COMPANY
A company owning a controlling amount of shares in one or more other companies also known as subsidiary companies.
INDEX
A numerical measure of the way a variable has changed over time.
INTERIM DIVIDEND
See Dividend.
ISSUED CAPITAL
Also known as subscribed capital of allotted capital.
A company is limited to the number of share it may issue by the Memorandum of Association. The Directors of the company then decide how many of those shares it will offer to the public. Those shares that are issued and subscribed to by shareholders are known as issued capital.
See also (i) Authorised Capital (ii) Memorandum of Association (iii) Paid up Capital.
LIMITED LIABILITY
A legal concept which limits the liability of shareholders to the value of their shares in a limited liability company.
If the shares are fully paid, then no further liability exists. If the shares are contributing shares, then shareholders are legally obliged to pay all outstanding calls.
LIQUIDITY
The ease with which an asset can be exchanged for money. The liquidity of an asset is determined by the nature of the market on which it is traded. For example, shares in a company are liquid because there is a well-organised market on which they can be brought and sold, and so within quite a short time, exchanged for cash.
LISTED COMPANIES
These are companies which are listed on a stock exchange.
LISTED SECURITY
The DSS meaning as stated in the Social Security Amendment Act (No 3) 1992 is :
A share in a company, or another security listed on a stock exchange.
Generally speaking this refers to a share(s) in a company which is quoted on a stock exchange and is available to be bought and sold by the general public.
MARKET CAPITALISATION
The stock market assessment of the company's value. This is calculated by multiplying the number of shares on issue by the individual share price (or market price).
ie. No of Shares on Issue x Market Price = Market Capitalisation
MARKET ORDER
An instruction to buy or sell a commodity or share at current market price.
MARKET VALUE
What you would get for an asset or security if you were to sell it. That might be quite different from what it cost you, what you have recorded as its market value, or its insured value or replacement value.
MEMORANDUM OF ASSOCIATION
A legal document drawn up at the foundation of a company which sets out the company's name, its registered office, its purposes, powers, objectives and its authorised share capital. The other document drawn up at the foundation of a company are the Articles of Association.
See also Articles of Association.
NEW ISSUE
This term encompasses all forms of security issues to raise more money. New shares are offered outside existing shareholders as well as to them. These are different from rights and entitlement issues offered to existing shareholders.
NO LIABILITY
A category of companies where the shareholders with partly paid shares are not bound to pay calls for unpaid capital, though non-payment of these calls means they forfeit their shares.
NOMINAL CAPITAL
See Authorised Capital
NOMINAL VALUE
See Face Value
NOMINEE COMPANY
A company who holds shares or securities on behalf of some one else.
NON-CUMULATIVE PREFERENCES SHARES
See Shares.
NOTE
A type of security usually traded on the money market. Common examples are: Treasury Notes, which are issued by the Federal Government, and promissory notes, which are issued by semi-government authorities and private sector borrowers.
ODD LOT
A parcel of securities that does conform to conventional round numbers of 100 and multiplies of it.
OFFEREE/OFFEROR
Offeree (target) relates to a company that is subject to a takeover bid.
Offeror (bidder) relates to a company making a takeover bid.
OPTIONS
Are a listed security for DSS purposes. Options entitle the holder of the option to buy or sell ordinary shares at a given price within a given period. The option holder is not obliged to take-up the option and can let it lapse. (It is then worthless). Options may be issued with a dividend or bonus issue. An option to buy is a "call option". An option to sell is a "put option" and an option to buy or sell is a "double option".
See also Bonus Issues, Company Options, Exchange Traded Options.
ORDINARY SHARE
See Shares
PAID UP CAPITAL
That part of a company's issued capital that has been paid for.
Also see Called-up Capital
PAR VALUE
See Face Value
PARI PASSU / NON PARI PASSU
New shares may be issued on the basis that they are entitled to the next dividend (known as pari passu); or on the basis they do not rank for dividends until some future date - usually after the next dividend is declared (known as non-pari passu).
PARTICIPATING PREFERENCE SHARES
See Shares.
PORTFOLIO
Entire collection of a person's different investments.
PREFERENCE SHARES
See Shares
PREMIUM
The extra amount (premium) the purchaser pays for a share or security by which a security or share is quoted or issued above it's face value. The opposite is "discount".
See also Discount
PRICE-EARNINGS (P/E) RATIO
The market price of an ordinary share divided by the most recent years earnings per share. This provides a measure of the price that has to be paid for a given income from the share. For example, a company has 50c ordinary shares which are quoted at $1.00 on the stock exchange. If the earnings for the previous year were 20c per share, then the P/E ratio would be 5 to 1, which is usually written as 5/1 ($1.00 / 0.20). This tells the investor that it would cost him 5 cents to earn 1 cent.
ie Share Market Price
-------------------- = PE Ratio
Earnings Per Share
See also (i) Earnings (ii) Earnings Per Share (iii) Earnings Yield.
PRIVATE COMPANY
Private companies have share capital but have restricted rights to transfer shares, are limited to not more than 50 members, are prohibited from inviting the public to subscribe for shares and are prohibited from inviting the public to deposit money with the company.
Also see Public Companies
PROSPECTUS
A brochure that has to be issued by any company or authority seeking to raise money from the general public through the issues of shares or other securities. The prospectus sets out the details of the investment offered.
PUBLIC LISTED COMPANY
A public company listed on a stock exchange, whose shares can be bought and sold by members of the public.
QUOTED SECURITIES
Tradeable securities listed on a stock exchange.
RATE OF RETURN
Calculated profit on the invested capital.
REDEEMABLE
Usually, exchangable for cash.
REDEEMABLE SECURITIES/SHARES
Securities and shares that are repayable at their face value on a given date.
See also Shares.
RESERVES
Companies may retain proportions of their profits as reserves. They are created from accumulated profits which have not been distributed to shareholders through dividend payments.
RIGHTS ISSUE
A rights issue is a new issue of shares made to existing shareholders in proportion to their shareholdings, for the purpose of raising further capital for the company. Unlike bonus issues the rights issue is not free. The price, which is referred to as the application money, must be less than the market price of the existing shares otherwise there would be no incentive for shareholders to accept the offer.
There is no obligation on the shareholder to accept the offer so he may allow it to lapse. Furthermore a rights issue is usually renounceable which means the shareholder can sell or transfer his rights if he does not wish to take them up. The rights can be traded on the exchange for a specific period.
SCRIP
A general term applied to certificates of loan securities, shares in a company etc, always to be kept in a safe place.
The word 'scrip' is an abbreviation of 'subscription certificate'.
SCRIP ISSUE
An issue of new shares to shareholders in proportion to their existing holdings made, as distinct from a rights issue, without charge. A scrip or bonus issue does not raise new capital. It is merely an adjustment to the capital structure which capitalises reserves, usually consisting of past profits.
SECURITIES
The name given to any document that can be related to a money value - shares, debentures, bonds, bank bills etc. Where they are listed on any stock exchange they are known as listed securities.
SHARE
Shares are the parts into which the capital of a company is divided. The ownership of a share entitles the holder to receive a proportionate part of the profits distributed by the company, and to take part in the management to the extent provided by the articles of association. Shares may be of different kinds: eg, ordinary, preference or deferred shares.
Ordinary Shares: Those which generally have no special rights or privileges over other shares and which comprise the bulk of a company's capital. They are a listed security for DSS purposes.
Contributing (Or Partly Paid) Shares: Are a listed security for DSS purposes. Are listed separately from ordinary shares. Are basically ordinary shares which have not been fully paid for by the initial purchaser at the time they were issued by the company. Can perform differently from the same fully paid share and have a different gain/loss performance, although dividends are distributed in direct proportion to the paid up value, so the dividend return is proportionate to fully paid shares.
Preference Shares: Are a listed security for DSS purposes. This type of share is given a preference either as to dividends or return of capital or both and may be of the following types:-
(a) Cumulative preference shares. These entitle the holder to receive, as profits are available, a stated dividend yearly. Should there be a shortage in the payments of the dividend of any year, the arrears are carried forward and paid as soon as circumstances permit.
(b) Non-cumalative preference shares. Where the preference shares are non-cumulative and a dividend is not paid in any year, the member loses the right to any dividend for that year.
(c) Participating preference shares. Are those which receive a stated preferential dividend yearly, but which possess the right to participate to the extent indicated in any further profits after the ordinary shareholders have received a stated percentage of dividend.
Preference shares of any of the above classes are prima facie preferential as to dividend but are not prima facie preferential as to a return of capital in a winding up of the company.
(d) Redeemable preference shares. These are specially allowed by the Companies Acts of all States. These shares are issued on the terms that they are to be redeemed by the company at a later date. They may be redeemed out of profits or out of the proceeds of a fresh issue of shares.
Deferred Shares are those in which the holders' rights are deferred until the claim of other classes of shares are satisfied, usually in the matter of dividends or return of capital. Sometimes this class of share is accepted by the vendors of a business to indicate their faith in the proposition.
SHARE CAPITAL
The capital of a company contributed to by shareholders.
SHARE CERTIFICATE
A document issued by a company to its shareholders showing the number of shares that are held, the amount paid and the name in which the shares are registered.
SHAREHOLDERS' INTEREST
The net amount of the company's funds that belong to the shareholders.
SHARE PREMIUM RESERVE
Where a company issues shares at a premium, whether for cash or otherwise, a sum equal that amount which is greater than the face value of the share must be transferred to an account to be called the "share premium reserve".
When bonus issues are wholly paid out of a genuine share premium reserve, those shares are not considered as income for Departmental purposes as they represent a return of capital.
See also (i) Bonus Issue (ii) Premium.
SHARE REGISTER
The record of a company's shareholdings, showing their holdings.
SHARE SPLIT
Where the company divides all the shares into equal parts. ie May split shares into
1 = 2 or 1 = 3. Usually happens when the share price is large and shares are split which splits the price and makes them seem more saleable.
STAMP DUTY
This is a state government tax, but is uniform across Australia. Where shares are traded through a broker, the stamp duty is collected by the broker at the same time as brokerage and forwarded to the relevant government body. Where a transaction is made without the services of a broker, the buyer must purchase "duty stamps" and attach these to the transfer papers.
Transactions through a broker carry a stamp duty of 30 cents for every $100 value of transactions (or part thereof) and is payable by both the buyer and seller. "Off market" transactions carry a duty of 60 cents for every $100 (or part thereof), but is payable only by the buyer.
Stamp duty is payable on the transfer of ordinary shares, rights and options, but not on the issue of new shares or upon the transfer of debentures, notes and government/semi-government securities.
STOCK
The term stock originally indicated the capital of an enterprise (hence 'stockholders"). The term is now used freely in the same sense as shares.
STOCKBROKER
Also referred to as sharebrokers, they are authorised members of a stock exchange whose business it is to transact the buying and selling of securities listed on a stockmarket, as agents for their clients.
STOCK EXCHANGE
A market-place for shares and other securities - government bonds through to debentures, unsecured notes and shares.
SUSPENSION
Temporary stop to company share trading on the market. May be caused by the company or by the Stock Exchange.
TAKEOVER
One company taking controlling interest in another by the purchase of its shares.
TAKEOVER BID
An offer made to shareholders of one company by another company or individual to buy their shares at a stated price to gain control of the company.
TREASURY NOTES
Commonwealth Government short term securities issued through the Reserve Bank, for periods of 13 to 26 weeks, at a discount from face value. They are highly negotiable and are aimed at the professional short term money market.
UNLISTED SECURITY
A security that is not listed or traded on the stock exchange.
UNLIMITED COMPANY
This means a company formed on the principle of having no limit placed on the liability of its members. The holders of shares have no limit on their liability to contribute to the assets of the company in the event of it being wound up and consequently they can be called upon to pay any amount necessary to discharge the liabilities of the company. In Australia such types of companies are very rare.
See also (i) Limited Liability (ii) No liability Companies.
UNSECURED NOTES
These are issued regularly by finance companies, usually for periods ranging from three months to three years. The notes offer a higher rate of return than a debenture of the same maturity but do not carry the security of a debenture.
WARRANTS
Are similar to an option and are a listed security for DSS purposes.
YIELD
The effective return by way of dividend or interest, depending upon the particular investment, expressed as a percentage of the total purchase price.
See also(i) Earnings Yield Price (ii) Earning Ratio
Attachment B
ORD MINNETT
CONTRACT NOTE - PLEASE RETAIN THIS PORTION — SEND
-------------------------------------------------------------------------------------------
REF:TRADE DATE: 05/07/1993
ACCOUNT:SETTLEMENT:
BOUGHT FOR THE ACCOUNT OF:DATE: 12/07/1993
OFFICE: MELBOURNE
WE HAVE BOUGHT FOR YOU
SECURITY GWT — GWA INTERNATIONAL LIMITED
ORDINARY 25C FULLY PAID
---------------------------------------------------------------------------------------------
SEE REVERSE SIDE FOR TERMS AND CONDITIONS OF ISSUE
25,000 @1.3200 $33,000.00
STAMP DUTY $99.00
BROKERAGE $495.00
TOTAL CHARGES$594.00
-------------------------
TOTAL COST$33,594.00
Payments must be received by
10:00 am on the settlement date
shown above to ensure availability
of f unds and to avoid ASX penalties.
-----------------------------------------------------------------------------------------------
ORDER COMPLETED — BROKERAGE — 1.5000
TRANSACTIONS SUBJECT TO $80.00 MINIMUM BROKERAGE
PAYMENT MUST BE MADE ON RECEIPT OF CONTRACT NOTE
TO AVOID INTEREST CHARGES. PLEASE SEE REVERSE.
ORD MINNETT
REF:
ACCOUNT:TRADE DATE: 05/07/1993
SETTLEMENT:
Please detach and return after completing the following instructions. DATE: 12/07/1993
OFFICE: MELBOURNE
GWT GWA INTERNATIONAL LIMITED
25,000 @1.3200$33,594.00
ORD MINNETT
Member of Australian Stock Exchange Limited — ORD MINNETT LIMITED
ACN 002 733 048
Level 18 367 Collins Street — Document Exchange — Telephone (03) 608 4000
Melbourne VIC 3000 Australia — DN 31092 ASX Melbourne — Facsimile (03) 608 4142
--------------------------------------------------------------------------------------------
CONTRACT NOTE - PLEASE RETAIN FOR TAXATION PURPOSES
This Contract Note is issued subject to the Articles, Regulations, Bylaws, Rules customs and usuages of the Australian Stock Exhange Limited and the corrections of errors and ommissions. See reverse side for terms and conditions of dealing with Ord Minnett Limited.
ACCOUNT NO:CONTRACT:
ACCOUNT NAME:ADVISOR:
SOLD NOTE — WE HAVE SOLD FOR YOU — SETTLEMENT DATE
12/07/1993
SECURITY:GIO GIO AUSTRALIA HOLDINGS LIMITED
ORDINARY $1.00 FULLY PAID
TRADE DATE:05/07/1993 2,000 @ 2.5800 $5,160.00CR
STAMP DUTY$15.60
BROKERAGE 2.484% $128.20
----------------------
TOTAL PROCEEDS $5,016.20CR
ORDER COMPLETED
PROCEEDS WILL BE MAILED TO THE ABOVE ADDRESS
If the above settlement details are incorrect, please advise our Private Client Settlement Clerk immediately on (03) 608 4049
If you are not a sponsored holder or you have not already delivered your scrip to Ord Minnett Limited, please return the bottom portion of this contract with your scrip immediately. To avoid penalities and ensure prompt payment for your sale, certificates must be received by 2.00 pm on the business day prior to the settlement date shown above.
ORD MINNETT
Level 18 367 Collins Street, Melbourne VIC 3000
CONTRACT — ADVISOR
SETTLEMENT: 12/07/1993 — ACCOUNT:
SECURITY:GIO GIO AUSTRALIA HOLDINGS LIMITED
SOLD:05/07/1993 — 2,000 @2.5800$5,016.20CR
Attachment C
Veterans' Entitlements Act 1986s 5J.
(a) a society registered as a friendly society under a law in force in a State or
Territory; or
(b) a society that had, before 13 December 1987, been approved for the purpose of the definition of "friendly society" in subsection 115(1) of the Social Security Act;
and, for the purpose of the definition of "market linked investment" in this subsection, includes:
(c) a society that has been approved for the purposes of the definition of "friendly society" in subsection 115 (1) of the Social Security Act on or after 13 December 1987: and
(d) a society that is an approved friendly society for the purposes of the Social
Security Act;
"immediate annuity" means an annuity that is presently payable;
Note:for "presently payable" see subsection (3).
"investment"99, in relation to a superannuation fund, approved deposit fund or deferred annuity, has the meaning given by subsection (6);
"investment product"100, in relation to a managed investment or listed security, means all the investments or securities that are:
(a) in or with the same body corporate or in the same trust fund: and
(b) subject to substantially the same terms and conditions as that managed investment or that listed security:
"listed security"101 means:
(a) a share in a company; or
(b) another society;
listed on a stock exchange in Australia;
"managed investment''102 has the meaning given by subsections (lA), (lB) and (lC);
"market-linked investment" means:
(a) an investment in:
(i) an approved deposit fund; or
(ii) a deferred annuity; or
(iii) a public unit trust; or
(iv) an insurance bond; or
(b) an investment with a friendly society; or
(c) an eligible investment other than an investment referred to in paragraph (a) or (b);
or
99 Inserted by No.228, 1992, s.49, commencement 1.4.93.
100 Inserted by No.228, 1992, s.28, commencement 1.4.93. Substituted by No.228, 1992, s.81, commencement: 20.9.93.
101 Inserted by No.228, 1992, s.81, commencement 20.9.93
102 Inserted by No.228, 1992, s.28, commencement 1.4.93
Issue No.11A-01-00Unofficial reprint
January 1993 — 31
Veterans' Entitlements Act 1986s.46.
Division 8--Ordinary income test--investment income
Subdivision A--Introduction1
Structure of Division
462.. (1) This Division deals with various forms of investments and non-periodic receipts. The following Table indicates which provisions are relevant to particular investments and receipts:
TABLE
STRUCTURE OF DIVISION
column l — column 2 — column 3
item — investment — section(s)
1.Managed investment — 46AA-46AG
2.Certain accruing return investments made or acquiredbefore 1 January 1988 46B
3.Market-linked investments made or acquired before — 9 September 1988 46J-46L
4.Shares and other listed securities (from — 46AA-46AG
20 September 1993)
5.Superannuation fund investments before pension age — 46SA
6.Immediate annuities — 46T
7.Superannuation pensions — 46U
(2) If the person's ordinary income is not covered by any of the other Subdivisions, it may be covered by section 46A below.
Certain capital amounts not covered by other Subdivisions taken to be received over 12 months
46A.3 (1) Where a person becomes entitled, whether before or after the commencement of this section, to receive an amount of income that:
(a) is not income in the form of periodic payments; and
(b) is not income from remunerative work undertaken by the person; and
(c) is not a return from an accruing return investment; and
(d) is not a return from a market-linked investment made, or acquired, by the person on or after 9 September 1988;
the person is, for the purposes of this Act, to be taken to receive one fifty-second of that amount as income of the person during each week in the period of 12 months commencing on the day on which the person becomes entitled to receive that amount.
(2)4 A reference in subsection (1) to a person receiving an amount includes a reference to a person receiving an amount under an arrangement of the kind referred to in the definition of
1 See Table at end of Part III for equivalent provisions prior to 1.7.91
2 Amended by No.228, 1992, s.29, commencement: 1.4.93
3 Amended by No.73, 1991, s.l9, commencement: 1.7.91
4 Amended by No.73, 1991, s.l9, commencement: 1.7.91
Issue No.11A-03-08Unofficial reprint
January 1993 — 1
s.46AA.Veterans' Entitlements Act 1986
"accruing return investment" in subsection 5J (1) to the extent to which section 46C or 46D does not apply to that entitlement.
Subvision AA -- Managed investments and listed securities5
Investments to which this Subdivision applies
46AA. This Subdivision applies to an investment that is a managed investment unless it is:
(a) an accruing return investment that:
(i) was made or acquired before 1 January 1988; and
(ii) is covered by section 46B; or
Note:for 'accruing return investment' see subsection 5J(1).
(b) a market-linked investment that was made or acquired before 9 September l988.
Note 1: for'rnarket-linked investment' see subsection 5J(1),
Note 2: for the treatment of these market-linked investments see section 46J and 46K
(2)6 This subdivision applies to an investment in the form of a listed security.
Note: for "listed security" see subsection 5J (1).
(3) This Subdivision does not apply to bonds and debentures.
Note: bonds and debentures are dealt with under division 8B.
How investment returns are taken into account in working out pension rates
46AB.If:
(a) a person has an investment; and
(b) this Subdivision applies to the invesment; and
(c) based on its performance over the preceding 12 months, the invesment product to which that investment belongs has shown a return;
Note: for return on an investment product see section 46AD.
the person's ordinary income on a yearly basis is taken to be increased by:
value of investment X annualised rate of return on investment product
where:
'value of investment' is the value of the person's investment;
'annualised rate of return on investment product' is the annualised rate of return on the investment product based on its performance over that 12 months.
Note 1: for 'annualised rate of return' on the investment product see section 46AE below.
Note 2: actual receipts from the investment are not treated as ordinary income (see section 46AG below).
How investment losses are taken into account in working out pension rates
46AC. (1) If:
(a) a person has an investment; and
(b) this Subdivision applies to the investment; and
5 Subdivision inserted by No.228, 1992, s.30, commencement 1.4.93. Heading amended by No.228, 1992, s.82, commencement: 20.9.93
6 Subsections (2) and (3) inserted by No.228, 1992, s.83, commencement: 20.9.93
Unofficial reprintA-03-08Issue No.11
2 — January 1993
Veterans' Entitlements Act 1986s. 46AD.
(c) based on its performance over the preceding 12 months, the investment product to which the investment belongs has shown a loss;
Note: for loss on an investment product see section 46AD.
the person's ordinary income on a yearly basis is, subject to subsection (2), taken to be reduced by:
value of investment x annualised rate of loss on investment product
where:
'value of investment' is the value of the person's investment;
'annualised rate of loss on investment product' is the annualised rate of loss on the investment product based in its performance over that 12 months.
Note: for 'annualised rate of loss- on the investment product see section 46AE below.
(2) The reductions under subsection (1) in calculating a person's rate as at a particular day are not to exceed the sum of the increases to be made under section 46AB in working out the person's pension rate as at that day.
Returns and losses on investment products
46AD. An investment product:
(a) shows a return for a 12 month period if:
(i) a rate of return on the product has been declared during the period; or
(ii) the formula below gives a positive number; and
(b) shows a loss for a period if the formula below gives a negative number:
closing value + distributions--opening value
where:
'closing value' is the value of the product at the end of the period;
'distributions' is the sum of:
(a) the amount of the distributions (however described) made to the holders of the product during the period; and
(b) the value of bonus issues (however described) of the product made to holders of the product during the period; and
(c) the value of any other rights given to holders of the product during the period because they hold investments in the investment product;
'opening value' is:
(a) if the product has been available for the whole of the period--the value of the product at the beginning of the period; or
(b) if the product became available during the period--the value of the product when it became available.
Annualised rate of return or loss on investment product
46AE. (1) The annualised rate of return on an investment product for a period of 12 months is:
(a) if a rate of return on the product has been declared during the period --the declared rate of return; or
(b) in any other case--the rate worked out in accordance with subsections (5), (6) and (7).
(2) In applying paragraph (1)(a) disregard provisional or conditional declarations of rates of return.
Issue No. 11A-03-08Unofficial Print
January 1993 — 3
s.46AF.Veterans' Entitlements Act 1986
(3) For the purposes of this section, a declaration of a dividend is not a declaration of a rate of return.
(4) The annualised rate of loss on an investment product for a period of 12 months is the rate worked out in accordance with subsections (5), (6) and (7)
(5) The annualised rate of return or loss on an investrnent product is the rate of return or loss on the product expressed as a percentage per year.
(6) If the investment product became available during the period, the performance of the product while it has been available is to be extrapolated for a whole 12 months.
(7) In working out the rate of return or loss on an investment product for a period of 12 months, the following are to be taken into account:
(a) if the product was available at the beginning of the period--the value of the product at the beginning of the period;
(b) if the product became available during the period--the value of the product when it became available;
(c) the value of the product at the end of the period;
(d) the amount of the distributions (however described) made to the holders of the product during the period;
(e) the value of bonus issues (however described) of the product made to holders of the product during the period;
(f) the value of any other rights given to holders of the product during the period because they hold investments in the investment product.
Investment and disposal costs
46AF. (1) If:
(a) the person has an investment: and
(b) this Subdivision applies to the investrnent; and
(c) this Subdivision would operate, if this section did not apply, to increase the person's ordinary income on a yearly basis by a particular amount per year;
the amount of the increase is to be reduced by the amount of the reasonable costs that the person has incurred during the preceding 12 months in relation to the making, acquisition or disposal of investments to which this Subdivision applies.
(2) For the purposes of subsection (l), costs incurred by the person are reasonable if any other person making, acquiring or disposing of an identical investment would be required to pay those costs as a condition of bemg permitted to make, acquire or dispose of that investment.
Actual return on investments not treated as ordinary income
(a) a person has an investment; and
(b) this Subdivision applies to the investment;
any return on the investrnent that the person actually receives is taken, for the purposes of this Act, not to be ordinary income ,of the person.
Attachment D
EXAMPLE SHARE REVIEW FORM
BRANCH OFFICE
Centennial Plaza, Tower B
280 Elizabeth Street, Sydney
Postal Address:
GPO Box 3994, Sydney NSW 2001
Telephone: (02) 213 7777
Country residents free call: 008 113 304
FILE NO:
1993
SHARES REVIEW FORM
Dear Sir/Madam,
From the 30 September 1993 the Government will introduce new rules for assessing income from shares listed on Australian and overseas stock exchanges.
To enable the Department of Veterans' Aftairs to pay you the correct amount of pension, the information we already have regarding your shares must be updated.
The new rules will allow brokerage fees and stamp duty to be deducted from any income from shares (and from any managed investment income). You should provide details of any brokerage fees or stamp duty paid for shares transactions on the attached form.
Please answer all the questions and return the enclosed form in the envelope provided within 21 days of receiving this letter.
You are reminded that your obligation to advise changes in your income or assets as explained to you in previous advices continues to apply.
If you need help in filling in this form please contact this office on the above telephone number . If you would like to know more about the new rules and how they will affect your pension, you may wish to contact the Financial Information Service (FIS), which is provided free to all retirees and pensioners by the Department of Social Security. You may contact a FIS Officer by ringing the Social Security Teleservice Centre on 132300.
Yours sincerely
G.K. Stonehouse
Deputy Commissioner
Delegate of the Secretary
Shares Review
File number
The information requested in this form is required to assess your eligibility for a pension under the Veterans' Entitlements Act 1986. The Act provides that the Secretary may obtain information requested for the purposes of the legislation.
Information contained in this form may be provided to another Agency or body such as the Department of Social Security and the Australian Taxation Office for the purposes of data matching.
Please write in BLOCK LETTERS.
If you need more space for your answers, please attach a separate, signed sheet.
1. Do you or your partner own any ordinary shares, preference shares, or other securities (e.g. options or convertible notes) in companies listed on the Australian Stock Exchange?
Yourself — Your partner
No-- Yes-- - describe below — No-- Yes-- - describe below
You do not need to include details about any public listed trusts
Name of CompanyType of securityNumber ofOwner of
(e.g. ordinary share, preferenceshares, notesInvestment share, convertible note or option) or options (ie
self or
partner)
Example:
Triple X Holdings10% Preference50self
Double Y ProprietaryOrdinary100self
Triple Z CorporationOption 31/1/9550self
Double U IndustrialConvertible Notes200partner
2. Do you or your partner own any shares or other securities in companies listed on an overseas Stock Exchange?
Yourself — Your partner
No-- Yes-- - describe below — No-- Yes-- - describe below
Name of CompanyCountryType of securityNumberCurrentAmount ofOwner of
of stock(e.g. ordinary share, of shares, market dividend per invest
exchangepreference share,notes orvalue per share rec'd (ie self or
convertible note oroptionsshare $Ain last 12partner)
option)months $A
Example:
The Q CorporationUSAOrdinary50015.200.42joint
S and S HoldingsUK10% Preference10001.400.05self
3. Have you or your partner incurred any brokerage fees or stamp duty resulting from buying or selling shares or other securities listed on an Australian Stock Exchange?
(include only fees incurred since 20/9/92)
Yourself — Your partner
No-- Yes-- - describe below — No-- Yes-- - describe below
Date of paymentAmountName and address of brokerPerson
Paid $Aincurring
fee (i.e. self
or partner)
Example:
19/1/93 — 50 — ABC & Co. 116 Service Road City — self
4/2/93 — 70 — RQR Financial Services 121 Duty Road City joint
4. Do you or your partner own any shares or other securities in private or public companies not listed on a Stock Exchange?
Yourself — Your partner
No-- Yes-- - describe below — No-- Yes-- - describe below
Name of CompanyUnlistedType of securityNumberCurrentAmount ofOwner of
(U) or(e.g. A class,Bof sharesmarketdividend per Invest.
Private (P)class)value per share rec'd (i.e. self
or
share $Ain last 12partner)
months $A
Example:
J Smith Pty LtdPA Class10,0001.500.04self
T Jones Pty LtdPB Class5002.200.06partner
DECLARATION
I declare that the details I have given in this form and any accompanying documents are true and correct.
I authorise the Department to make any enquiries needed to establish my right to a service pension.
I am aware that there are penalties for making a false or misleading statement
Your signature — Your partner's signature
Attachment E
PROCESSING TIMETABLE - SHARE DATA COLLECTION
17/08/93 Registration of max. rate cases
18/08/93 Registration of less than max. rate cases
Generally all cases to be submitted with effect from 30 September 1993 (Pay Period 33, Day 1), or later.All cases are to have advices manually suppressed if submitted prior to 12 September 1993.
Exceptions include any complex cases for retrospective assessment which should be referred to Review Teams for subsequent updating for 30 September. Most cases should be processed for 30 September.
11 August 1993 Shares Data Collection screen operative
however, rate assessed will be a 'dummy' figure
until automatic assessment on weekend 11 &12 Sept.
when shares annual rale of return figure will be applied,
as well as new Sl rates, to cases with updated screens.
If examiners are able to ascertain
arrears payable and update
the new shares screen, they
can submit cases for 30 September.
If cases are submitted prior to
weekend of 10&11 September
advices must be suppressed.
Advices are requested to be suppressed
as a quarterly advices run will occur
on 9 September 1993. Ihis will also
solve the problem of producing incorrect
dummy income figure advices.
ALL UNLISTED, OVERSEAS AND PRIVATE COMPANY
SHARES MUST BE RECORDED ON THE PP.OA SCREEN.
Note: After the weekend of 11 & 12 September the old shares screen will cease to exist, in its current form, if the new shares screen has been updated. It is currently intended to copy data from the old shares screen, if applicable, to a screen similar to Other Assets. Should updated share data not be recorded by 12 September the existing shares information currently recorded will be accessible in a format to be advised.
Attachment F
COMMONWEALTH DEPARTMENT OF VETERANS' AFFAIRS
Appendix B. Screen Changes
The attached layouts show how screens will appear to the users for both the Shares Performance System and PIPS shares on-line processing.
A brief summary of the functionality associated with each screen, valid actions available and how to navigate to and from these screens accompanies each screen picture.
COMMONWEALTH DEPARTMENT OF VETERANS'AFFAIRS
PIPS Screens
PIPS Investment Information Menu (PP.II)
NEXT:PENSIONS PROCESSING
PSWD:
STATE; X FILE NO: XXXXX XXXXXXXXXXXXXXXXXXX DOB: XXXXXX
CASE NO: XX — XXXXXXXXXXXXXXXXX
PERSON IND: XXX EFF DATE: XXXXX STATUS: XXXX ASSMT ID:XX
>>> INVESTMENT INFORMATION (II) <n>
MS - MANAGED INVESTMENT SEARCH
SS - SHARE SEARCH
PF: 14=HOLD 16=RESUME
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Description
This screen is the menu for the PIPS Investment Information Sub-System. It provides for the navigation on to MS (Managed Investment Search) or SS (Share Search).
This screen replaces the existing PP.II screen. The functions that were performed by the old PP.II screen will now be performed by the PP.MS screen.
Valid Actions
The NEXT field has the following valid entries;
MS - To go to PIPS Managed Investments Search screen (PP.MS).
SS - To go to PIPS Shares Search screen (PP.SS).
PP.xx - To go to any other PIPS screen denoted by xx.
Navigation
Access to this screen is gained by entering the screen code (Il) in the NEXT field of any PIPS screen.
92 Assessment of Capital Gains and Losses from Shares 1992 Budget Initiative System Specification (SES/SIS) Final Draft
Input Fields and Edits
The NEXT field is the only input field - see valid actions above
Cursor Positioning.
Upon initial entry to this screen, the cursor will be positioned at the beginning of the NEXT field.
COMMONWEALTH DEPARTMENT OF VETERANS' AFFAIRS
PIPS Managed Investment Search (PP.MS)
NEXT:PENSIONS PROCESSING
PSWD:
STATE: X FILE NO: XXXXX XXXXXXXXXXXXXXXXX DOB: XXXXXX
CASE NO: XX — XXXXXXXXXXXXXXX
PERSON IND: XXX EFF DATE: XXXXX STATUS: XXX ASSMT ID: XXX
>>> MANAGED INVESTMENT SEARCH (MS) <n>
MANAGER:
PRODUCT:
DATE ACQUIRED:
ACTION:
TOTALS REALISATIONS:TOTAL ADDITIONS:
PF: 12=HELP 14=HOLD 15=END 16=RESUME
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Description
This screen searches the Managed Investment database by manager name. It has the same functions as the old PP.II screen.
Valid Actions
The action field has the same valid actions as the previous PP.II screen.
Navigation
This screen is accessed by entering "MS" at the Investment Information Menu (PP.II) or by entering ''MS'' in the NEXT field of any PIPS screen.
Input Fields and Edits
There are 4 input fields on this screen.
MANAGER - 50 characters alphanumeric.
PRODUCT - 50 characters alphanumeric.
DATE ACQUIRED - 8 characters in date format DD/MM/YY.
ACTION - l character alphabetic.
Cursor Positioning.
Upon initial entry to this screen, the cursor will be positioned at the beginning of the first input field.
94 Assessment of Capital Gains and Losses from Shares 1992 Budget Initiative System Specification (SES/SIS) Final Draft
COMMONWEALTH DEPARTMENT OF VETERANS' AFFAIRS
PIPS Share Screen (PP.SH)
NEXT:PENSIONS PROCESSING
PSWD:
STATE: X FILE NO: XXXXXXX XXXXXXXXXXXXXXX DOB: XXXXX
CASE NO: XXXXXXXXXXXXX
PERSON IND:XXX EFF DATE: XXXX STATUS: XXX ASSMT ID: XXXX
>>> SHARE (SH) <n>
ACT: X NAME: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
REL: XX NUM.SHARE: 999999 — PRICE 999.99 — RATE: -999.99
ASSET: 99999.99 INC PF: 9999.99
ACT: X NAME: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
REL: XX NUM.SHARE: 999999 — PRICE 999.99 — RATE: -999.99
ASSET: 99999.99 INC PF: 9999.99
ACT: X NAME: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
REL: XX NUM.SHARE: 999999 — PRICE 999.99 — RATE: -999.99
ASSET: 99999.99 INC PF: 9999.99
TOTAL FEE DEDUCTION: 9999.99
TOTALS FOR ALL XX ITEMS — ASSET: 99999.99 — INC PF: -999.99
PF: 12=HELP 14=HOLD 15=END 16=RESUME l9=PGUP 20=PGDN 22=ADD
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Description
This screen displays the current shareholdings of the client. It lists 3 to a screen with the facility to scroll forward and back through the client's shares details.
The NAME field consists of the 20 character abbreviated company name followed by the 50 character share description.
(Eg. BROKEN HILL PTY LTD $1.00 ORDINARY FULLY PAID)
Valid Actions
The action field has the following valid entries;
C - To change the details of a client shareholding.
D - To delete a shareholding from the client record.
F - To go to the PIPS Share Fees screen (SH.SF).
H - To go to the PIPS Share Rate History screen.
If the exarniner wishes to add more shareholdings to the client record from this screen they progress to the PIPS share search screen (PP.SS) using either PF key 22 or by entering "SS" in the next field.
Navigation
This screen is accessed by entering "SH" in the NEXT field of any PIPS screen.
Input Fields and Edits
There are 3 input fields for each line item on this screen.
ACTion - l character alphabetic
RELation - 3 characters alphabetic.
NUM.SHARE - 6 characters alphanumeric.
Cursor Positioning.
Upon initial entry to this screen, the cursor will be positioned at the beginning of the first input field.
Scrolling
There is no set system limit to the number of screens that can be scrolled through. Scrolling is only limited by the data being accessed.
COMMONWEALTH DEPARTMENT OF VETERANS' AFFAIRS
PIPS Share Screen (PP.SS)
NEXT:PENSIONS PROCESSING
PSWD:
STATE: X FILE NO: XXXXXXX XXXXXXXXXXXXXXX DOB: XXXXX
CASE NO: XXXXXXXXXXXXX
PERSON IND:XXX EFF DATE: XXXX STATUS: XXX ASSMT ID: XXXX
>>> SHARE (SS) <n>
START SEARCH ON COMPANY: XXXXXXXXXXXXX
ACT
(A/H)NAME
: X XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
: X XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
: X XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
: X XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
: X XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
: X XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
: X XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
: X XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
TOTAL ADDITIONS: XX
PF: 12=HELP 14=HOLD 15=END 16=RESUME l9=PGUP 20=PGDN 21-PREV
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Description
This screen enables the shares database to be searched using the abbreviated company name.
The search and subsequent display commences from the first record on or after the information entered in the START SEARCH ON COMPANY field. What is displayed in the NAME field is the abbreviaTed cornpany name strung together with the 50 character share description.
(Eg. BROKEN HILL PTY LTD $1.00 ORDINARY FULLY PAID)
The examiner locates the share or shares that are to be added to the client record and this addition is carried out by entering an "A" in the action field beside the required share. The TOTAL ADDITIONS field indicates how many additions have been made to this client during this session.
The Shares Performance Database can be accessed in an inquiry mode by leaving the client details blank. Searches start from the parameter entered or from the beginning if this field is left blank.
Valid Actions
The action field "ACT" has the following valid entries;
A - To add a share located at this screen to the client record.
H - To display the history details of a selected share on the Share Rate History screen (SH.H).
Navigation
This screen is accessed by entering 'SS' in ihe NEXT field of any PIPS screen or by using PF 22 at the PIPS Share screen (PP SH).
Input Fields and Edits
There are 2 input fields on this screen.
START SEARCH ON COMPANY - 20 characters alphabetic.
ACTion - l character alphabetic.
Cursor Positioning.
Upon initial entry to this screen, the cursor will be positioned at the beginning of the first input field.
Scrolling
There is no set system limit to the number of screens that can be scrolled through. Scrolling is only limited by the data being accessed.
COMMONWEALTH DEPARTMENT OF VETERANS' AFFAIRS
PIPS Share Rate History (PP.SH.H)
NEXT:PENSIONS PROCESSING
PSWD:
STATE: X FILE NO: XXXXXXX XXXXXXXXXXXXXXX DOB: XXXXX
CASE NO: XXXXXXXXXXXXX
PERSON IND:XXX EFF DATE: XXXX STATUS: XXX ASSMT ID: XXXX
>>> SHARE RATE HISTORY <n>
NAME: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
DATE — PRICE — RATE%DATE — PRICE — RATE%
XXXXX — XXXXX — XXXXX — XXXXX — XXXXX — XXXXX
XXXXX — XXXXX — XXXXX — XXXXX — XXXXX — XXXXX
XXXXX — XXXXX — XXXXX — XXXXX — XXXXX — XXXXX
XXXXX — XXXXX — XXXXX — XXXXX — XXXXX — XXXXX
XXXXX — XXXXX — XXXXX — XXXXX — XXXXX — XXXXX
XXXXX — XXXXX — XXXXX — XXXXX — XXXXX — XXXXX
XXXXX — XXXXX — XXXXX — XXXXX — XXXXX — XXXXX
XXXXX — XXXXX — XXXXX — XXXXX — XXXXX — XXXXX
XXXXX — XXXXX — XXXXX — XXXXX — XXXXX — XXXXX
XXXXX — XXXXX — XXXXX — XXXXX — XXXXX — XXXXX
PF: 12=HELP 14=HOLD 15=END 16=RESUME 19=PGUP 20=PGDN 21=PREV
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Description
This screen displays the history details for a share selected at the PIPS Share Search screen (SH.S).
The most recent 20 history records are listed in two columns starting with the most recent in the top of column l. More history records can be viewed by using PF Key 20 to page down.
This information will be useful to examiners trying to identify the correct shares for addition to the client record or for answering enquiries from clients as to what rates have been used to calculate AROR for particular shares.
Valid Actions
There are no specific actions from this screen. It is expected that examiners will return to the PIPS Share Search screen (PP.SS) using PF Key 21 for the previous screen and from there either continue their search or add the share detail to the client record.
Navigation
This screen can only be accessed by entering "H" alongside a selected share at the PIPS Share Search screen (PP.SS) or at the PIPS Share screen (PP.SH).
Input Fields and Edits
There are no input fields on this screen.
Cursor Positioning.
Upon initial entry to this screen, the cursor will be positioned at the beginning of the NEXT field.
Scrolling
There is no set system limit to the number of screens that can be scrolled through. Scrolling is only limited by the data being accessed.
COMMONWEALTH DEPARTMENT OF VETERANS' AFFAIRS
PIPS Share Fees (PP.SH.F)
NEXT:PENSIONS PROCESSING
PSWD:
STATE: X FILE NO: XXXXXXX XXXXXXXXXXXXXXX DOB: XXXXX
CASE NO: XXXXXXXXXXXXX
PERSON IND:XXX EFF DATE: XXXX STATUS: XXX ASSMT ID: XXXX
>>> SHARE FEES <n>
ACT — DATE — AMOUNT — FEE
(A/C/D)PAID — PAID(PF)
: X — XXXXX — XXXXX — XXXXX
: X — XXXXX — XXXXX — XXXXX
: X — XXXXX — XXXXX — XXXXX
: X — XXXXX — XXXXX — XXXXX
: X — XXXXX — XXXXX — XXXXX
: X — XXXXX — XXXXX — XXXXX
: X — XXXXX — XXXXX — XXXXX
: X — XXXXX — XXXXX — XXXXX
TOTAL FEES PER FORTNIGHT: XXXXX
PF: 12=HELP 14=HOLD 15=END 16=RESUME l9=PGUP 20=PGDN 21=PREV
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Description
This screen displays details of the fees paid by a client that are associated with shares.
The latest seven fee records are shown with the most recent on the second line. The first line is left free so that additional fees can be recorded.
The total fees per fortnight is calculated by adding up all fees for the last 12 months and dividing by 26. This figure refers to all fees, not just the seven shown on the screen at the time.
Valid Actions
The action field "ACT" has the following valid entries;
A - To add a fee record to the client database.
Note: A is only valid on the first line.
C - To change the details of an existing fee record.
D - To delete a fee record from the client database.
Note: C and D are only valid on the bottom seven lines.
As a fees record is added or updated the exarniner only needs to record the date and total amount of fees paid the third column is calculated automatically.
Navigation
This screen is accessed by entering "F" alongside a selected share at the PIPS Share screen (PP.SH) or by entering "SF" in the NEXT field of any PIPS screen.
Input Fields and Edits
There are 3 input fields for each line item on this screen.
ACTion - l character alphabetic (see valid actions above)
DATE PAID - 8 characters in format DD/MM/YY.
AMOUNT PAID - 4 characters alphanumeric.
Note: Both DATE PAID and AMOUNT PAID must be completed if adding a new fee record or if performing a change to an existing fee record.
Cursor Positioning.
Upon initial entry to this screen, the cursor will be positioned at the beginning of the first input field.
Scrolling
There is no set system lirnit to the number of screens that can be scrolled through. Scrolling is only limited by the data being accessed.
COMMONWEALTH DEPARTMENT OF VETERANS' AFFAIRS
PIPS Other Assets (OA)
NEXT:PENSIONS PROCESSING
PSWD:
STATE: X FILE NO: XXXXXXX XXXXXXXXXXXXXXX DOB: XXXXX
CASE NO: XXXXXXXXXXXXX
PERSON IND:XXX EFF DATE: XXXX STATUS: XXX ASSMT ID: XXXX
>>> OTHER ASSETS <n>
DESCRIPTION — NO.OF VALUATION — NET ASSET INCOME
ACT — REL — TYPE OR COMPANY NAMESHRS — BY — DATE — VALUE(PF)
:X — XX — XX — XXXXXXXXXXXXX — XXX — XXXX — XXXX — XXXX
:X — XX — XX — XXXXXXXXXXXXX — XXX — XXXX — XXXX — XXXX
:X — XX — XX — XXXXXXXXXXXXX — XXX — XXXX — XXXX — XXXX
:X — XX — XX — XXXXXXXXXXXXX — XXX — XXXX — XXXX — XXXX
:X — XX — XX — XXXXXXXXXXXXX — XXX — XXXX — XXXX — XXXX
:X — XX — XX — XXXXXXXXXXXXX — XXX — XXXX — XXXX — XXXX
:X — XX — XX — XXXXXXXXXXXXX — XXX — XXXX — XXXX — XXXX
:X — XX — XX — XXXXXXXXXXXXX — XXX — XXXX — XXXX — XXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Description
This screen allows for the recording of other client assets. It will be modified to allow for two new TYPE values, "SH" for Australian shares not listed on the stock exchange and "OS" for overseas shares.
It will also be changed to incorporate a new field ''NO.OF SHRS" so that the examiner can record the number of shares held for either "SH" or "OS" shares.
The only shares that will be recorded using this screen are those which cannot be located using the new shares system. It is expected that these numbers will be small and will only cover such investments as private company shares.
The examiner will have to manually calculate asset and income values (as they do under the present system) and record them here. No offsetting rules apply to shares not listed on the stock exchange so shares recorded at this screen will be treated exactly the same as shares were previously.
Valid Actions
The valid entries in the ACTION field are;
A - To add an asset to the client database.
C - To change the details of an existing asset.
D - To delete an asset from the client database.
The valid entries in the TYPE field are;
FT Family Trusts
Ll - Life Insurance.
SH - Australian Shares not listed on the stock exchange.
OS - Overseas Shares.
OT - Other assets not covered by any other processing.
Navigation
This screen is accessed by entering PP.OA in the NEXT field of any previous screen.
Input Fields and Edits
There are 9 input fields for each line item on this screen.
ACTion - l character alphabetic - see valid actions above.
RELation - 3 characters alphabetic.
TYPE - 2 characters alphabetic - see valid types above.
DESCRIPTION OR COMPANY NAME - 20 characters alphanumeric.
NO.OF SHRS - 5 characters alphanumeric.
Note: Must be completed if TYPE = OS or SH.
VALUATION BY - 6 characters alphanumeric.
VALUATION DATE - 8 characters in date forrnat DD/MM/YY.
NET ASSET VALUE - 9 characters numeric.
INCOME (PF) - 7 characters numeric.
Cursor Positioning.
Upon initial entry to this screen, the cursor will be positioned at the beginning of the first input field.
Scrolling
As the PP.OA screen is an old screen with minor modifications, it is subject to the same scrolling limitations as other screens that use the PA1 key for this function. (ie. maximum of 9 screens can be displayed).
COMMONWEALTH DEPARTMENT OF VETERANS' AFFAIRS
PIPS Previous Shares (PP.PS)
NEXT:PENSIONS PROCESSING
PSWD:
STATE: X FILE NO: XXXXXXX XXXXXXXXXXXXXXX DOB: XXXXX
CASE NO: XXXXXXXXXXXXX
PERSON IND:XXX EFF DATE: XXXX STATUS: XXX ASSMT ID: XXXX
>>> PREVIOUS SHARES <n>
SHARE — NO. OF — MARKET — ASSET — INCOME
ACTION — REL — COMPANY NAME — TYPE — SHARES — VALUE — AMOUNT — AMOUNT
(P/F)
:X — XXX — XXXXXXXXXXX — XXXXX — XXXX — XXXX — XXXXX — XXXX
:X — XXX — XXXXXXXXXXX — XXXXX — XXXX — XXXX — XXXXX — XXXX
:X — XXX — XXXXXXXXXXX — XXXXX — XXXX — XXXX — XXXXX — XXXX
:X — XXX — XXXXXXXXXXX — XXXXX — XXXX — XXXX — XXXXX — XXXX
:X — XXX — XXXXXXXXXXX — XXXXX — XXXX — XXXX — XXXXX — XXXX
:X — XXX — XXXXXXXXXXX — XXXXX — XXXX — XXXX — XXXXX — XXXX
:X — XXX — XXXXXXXXXXX — XXXXX — XXXX — XXXX — XXXXX — XXXX
:X — XXX — XXXXXXXXXXX — XXXXX — XXXX — XXXX — XXXXX — XXXX
MORE:(Y)TOTALS FOR ALL XX ITEMS===> ASSETS — INCM:
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Description
This screen was previously used for shares recording (the old PP.SH screen). It has been re-named to enable the old MLAIVAL "SH" shares structure to be displayed.
It is believed that this facility will only be required in the interim period between when the new screens are implemented and when all old shares have been deleted.
No updates are available from this screen, it will be display only.
Valid Actions
The action field will be disabled.
If the examiner wishes to add shareholdings to the client record, they will have to use either the new PP.SH facility or the PP.OA screen.
Navigation
This screen is accessed by entering "PS" in the NEXT field of any PIPS screen.
Input Fields and Edits
There are no input fields on this screen.
Cursor Positioning.
Upon initial entry to this screen. the cursor will be positioned at the beginning of the NEXT field.
Scrolling
As the PP.PS screen is an old screen that has simply changed name, it is subject to the same scrolling limitations as other screens that use the PA1 key for this function. (ie. maximum of 9 screens can be displayed).
TRAINING HANDOUT
NOTE: To date the PP.SM (System Menu) has not been updated.
By entering PP.SS in the 'next' field you will go to the Share Search Screen.
The cursor will default to the ACTion field.
You will only be able to put in A-ADD or H-HISTORY.
You may PF19 or PF20 if you wish to page up or down or you may go to the 'Company Start Search' field and place character/s there and enter. This will then default to the appropriate place in the alphabet.
If you select A-ADD then you will receive a message of 'Share(s) successfully added to assessment'.
If you select H-HISTORY then you will automatically be taken to the 'Share Rate History' Screen. This will default any existing history for you to look at.
You will then receive a message of 'Press PF21 to return to Share Search
(PP.SS) screen.
If you PF21 you will find yourself at the previous screen.
NOTE: Refer legend for use of the other PF keys.
You then go to the 'next' field and key PP.SH. This will take you to the Share Screen.
On this screen you will be able to locate the latest entry you made (when you selected A-ADD on the PP.SS Screen.).
A 'C'-CHANGE will automatically default to the ACTion field. This is because the user is now required to fix this entry. The user will be required to enter the RELation field, and the NUMber OF SHARES field . They then press enter.
ACTion for this screen can only be C-CHANGE, D-DELETE, F-FEE or H-HISTORY.
If an H-HISTORY is placed in the ACTion field you will be taken to the 'Share Rate History' screen. There you will be able to see the history of this share.
The PRICE, RATE and INC PF will automatically be placed there by the system.
If you PF21 you will return to the PP.SH screen.
If you enter F-FEEs in the ACTion field you will be taken to the fees screen. You are then able to A-ADD, C-CHANGE or D-DELETE Fees.
To A-ADD place A in the ACTion field, the DATE the fees were paid and also the AMOUNT PAID press enter. You will receive a message of "Adds, Deletes, Updates performed successfully'.
To C-CHANGE or D-DELETE place C or D in the ACTion field and enter. A message of "Adds, Deletes, Updates performed successfully' will appear.
If you then PF21 you will return to the Share Screen.
NOTE: Fees are not linked to a particular share type. F-FEES is to be placed in the first ACTion field to get to the Fees Screen. You DO NOT need to place an F beside a particular share type.
NOTE: PF22 = will also take you direct to the PP.SS screen to make another selection.
PF23 = will also take you direct to the PP.SF screen.
For other PF key explanations please refer to legend.
Attachment G
Extract from GOSP - GIFTING:
Disposal Of Assets/Income On Or After 1 March 1991:
The allowable gifting limit was increased to $10,000 on 1 March 1991. This applies to pensioners who are not members of a couple and members of a couple alike.
The amount of disposition is assessed at the same rate for a period of five years (ie no depletion of the asset or income values on the anniversary of the disposal).
For Example:
A couple give $15,000 to a relative on 20 August 1991.
$5,000 is an assessable asset for a period of five years with the assumed property rate used to determine the value of income disposal (unless the disposal of actual income is greater).
Transactions That Constitute Disposal Of Both Income And Assets
Section 48D VEA contains the rules covering the disposal of income-producing assets.
When a client disposes of an income-producing asset and receives adequate consideration for the disposal, he or she will also be accepted as having received adequate consideration for disposal of the associated income.
If a person disposes of assets that produce income, and the value of those assets is less than the relevant allowable gifting limit, the asset as well as the income produced by the disposed assets does not affect pension assessment.
For Example:
A couple give away $8,000 on 1 April 1991. The money was in a credit union account paying 15% interest a year. The allowable gifting limit is $10,000. Therefore, the asset of $8,000 and the interest that the money was earning do not affect pension assessment because the amount gifted is below the allowable gifting limit.
When a client disposes of an income-producing asset for less than market value any consideration received will be accepted as being consideration for both the asset and the income.
For Example:
A single pensioner receives $60,000 for a house worth $100,000 from which he was receiving rent of $400.00 a fortnight. The disposal occurred on 15 October 1991 and disposal has not occurred previously.
The consideration for assets test purposes is $60,000; that is, the amount actually received.
The income consideration figure is calculated in the following manner:
$ 60,000 — X$400=$240
$100,000
Consequently, the value of disposed assets is ($100,000 - $60,000) $40,000 and the value of disposed income is ($400 - $240) $160 per fortnight. The allowable gifting limit must be taken into account before determining the assessable value of the disposal.
The person may gift $10,000 in the pension year. Therefore the assessable disposed asset amount is ($40,000 - $10,000) $30,000.
The disposed income figure is calculated in the following way:
$30,000 — X$160=$120
$40,000
In any case where a client simultaneously disposes of assets which produce different levels of income, the allowable gifting limits are to be attributed to the higher income producing asset.
If an asset disposed of produced a fluctuating level of income, the amount of income disposal should be determined by having regard to average income over the previous five years. However, if there are sound reasons to believe that the income in future will on average be significantly higher or lower, then the anticipated rate of income should be taken into account.
Where a client has converted an income-producing asset into money and then gifted the money, and the requirements of the purpose test are met, the rate of income to be maintained is the amount the asset was previously producing or the assumed property rate, whichever is the greater.
Attachment I
SHARES
What changes are being made to the assessment of shares for pension purposes?
The income test for shares will change from:
30 September 1993 for service pensioners; and
23 September 1993 for Social Security pensioners.
Income from shares will be assessed on how much they have increased in value and the amount of dividends paid during the previous 12 months.
Losses on shares (or managed investments) can be deducted from ongoing income from other shares and managed investments.
Brokerage fees and stamp duty paid when buying and selling shares can be deducted from share and managed investment income for 12 months from the sale or purchase date.
NOTE: The changes relate only to shares and other securities listed on the stock exchanges in Australia. If you hold shares in a private company, or an unlisted public company, these changes will not affect you.
How will the Department of Veterans' Affairs calculate how much income is being earned by my shares?
Income from shares is calculated as follows:
Step 1
Add the increase in value of the share (over the last 12 months) to the dividend paid and make this a percentage of the price 12 months ago. This is called the percentage rate of return.
Example:
On 30 September 1993, the last sale price of Company A's shares was $1.10 per share.
The price 12 months ago was $1.00 per share.
During the last 12 months, a 5c dividend per share was paid.
Increase in value:$1.10 - $1.00
= 10c
Dividend:= 5c
(10c + 5c)= 15c
15c as a percentage of $1.00 = 15%
(ie.15 x 100)
100
Step 2
Assessable income from shares is calculated by multiplying the percentage rate of return by the last sale price for each type of share being assessed. That is:
Income = No. of shares x last sale price x rate of return
Example:
Let's say you hold 1,000 shares in Company A at 30 September 1993. The last sale price is $1.10 and the rate of return as calculated above is 15%. The income from these shares is determind as follows:
1,000 shares x $1.10 x 15%
= $165 per annum
=$6.35 per fortnight.
Why don't the rules use the actual amount of my gains or losse over the past year to assess my income?
The income test calculates your rate of pension according to financial resources currently available to you. It does not take into account past dollar gains or losses from shares.
Accordingly, the rules establish your current rate of income from the shares you own, which you can use for your own financial support at a given point in time. This is done by measuring the current growth in the value of your shares.
If I make a loss on one parcel of shares, will I be able to offset this against income from my other shares?
Yes, Veterans' Affairs works out how much income all your shares
and managed investments have returned. This amount can be positive or negative depending on how well each investment has performed. Negative amounts (ie. losses) can be deducted from the total amount of income from your shares and managed investments. The following example explains how this works.
Example:
Say you hold 1,000 shares in Company B and 500 shares in Company C.
The shares in Company B are worth $1.55 each and the rate of return was calculated as +15%.
The shares in Company C are worth $0.90 each and the rate of return was calculated as -22%.
Income would be assessed as follows:
Income from shares in Company B
1,000 x $1.55 x 15%
= +$8.94 per fortnight.
Income from shares in Company C
500 x $0.90 x -22%
= -$3.81 per fortnight.
Assessable income equals
$8.94 - $3.81 = $5.10 per fn.
What happens if I bought my shares at a high price some years ago, have made a gain over the past 12 months, but still haven't recouped my losses since purchase?
To ensure that changes apply to all pensioners in the same way, the price of your shares at the date they were first purchased will not be taken into account. If the purchase prices of each parcels of shares held by individual pensioners was considered, people with the same current financial resources would be paid different amounts of pension.
Using the purchase price would disadvantage many pensioners, as most would have earned a gain, rather than a loss from the time they purchased their shares.
It is fair that pensioners with the same current share holdings and other financial resources receive the same amount of pension. To ensure this occurs, the Department will only be looking at share performance over the previous 12 months.
How often will Veterans' Affairs reassess my income from shares?
The Department will automatically reassess share income every three months (January, March, July and September). You will also be able to advise of changes of circumstances, or seek a review between these times if you wish to have your pension reassessed.
Will Veterans' Affairs allow me any deductions from my share income?
Yes, your brokerage fees and stamp duty can be deducted from your share income for 12 months from the time they are incurred. They can only be offset against income from shares and managed investments.
When you are charged brokerage fees and stamp duty, you should contact the Depertment so that the amount you have paid can be deducted from your share and managed investment income. There is no limit to the number of brokerage fees and stamp duty you can claim.
For More Information
If you would like more information about shares, staff at your local Veterans' Affairs office are willing to assist you.
In addition, the Department of Social Security has a free Financial Information Service (FIS).
FIS Officers can explain, in detail, the new rules and how they are likely to affect your payments, as well as helping you identify the options available to you.
A FIS Officer in your area can be contacted by phoning Social Security Teleservice on 13 2300.
This call can be made from anywhere in Australia for the cost of a local call.
Attachment H
SHARES
What changes are being made to the Social Security assessment of shares?
The income test for shares will change from:
20 September 1993 for allowees;
23 September 1993 for pensioners:
and
30 September 1993 for Veterans' Affairs service pensioners.
Income from shares will be assessed on how much they have increased in value and the amount of dividends paid during the previous 12 months.
Losses on shares (or managed investments) can be deducted from profits on other shares (and most other managed investments).
Brokerage fees paid to buy and sell shares can be deducted from share and managed investment profits for twelve months from the sale or purchase date.
NB. The changes relate only to shares and other investments listed on the Australian stock exchange and shares listed on any of the overseas exchanges. If you hold shares in a private company, or an unlisted public company, these changes will not affect you.
How will the Department of Social Security calculate how much income is being earned by my shares?
Income from shares is calculated as follows:
Step 1
Adding the increase in value of the share (over the last 12 months) to the dividend paid and making this a percentage of the price 12 months ago. This is called the percentage rate of return.
Example:
On 20 September 1993, the last sale price of Company A's share was $1.10 a share. The price 12 months ago was $1.00. During the last 12 months, a 5c dividend per share was paid.
Increase in value= $1.10 - $1.00 = 10c
Dividend= 5c
10c + 5c= 15c
15c as a % of $1.00= 15% (ie 15/100 x 100)
Step 2
Assessable income from shares is calculated by multiplying the percentage rate of return by the last sale price for each type of share being assessed. That is:
Income = No. of shares x last sale price x % rate of return
As an example, a person holds 1,000 shares in Company A at 23 September 1993. The last sale price is $1.10 and the rate of return as calculated above is 15%. The annual income from these shares is determined as follows:
Income = 1,000 x $1.10 x 15% = $165.00.
Why don't the rules use the actual amount of my gains or losses over the past year to assess my income?
The Social Security income test calculates your entitlement according to financial resources currently available to you. It does not take into account past dollar profits or losses from shares.
Accordingly, the rules establish your current rate of income from the shares you own, which you can use for your own financial support at a given point in time. This is done by measuring the current growth in your shares' value.
If I make a loss on one parcel of shares, will I be able to offset this against gains on my other shares?
Yes, Social Security works out how much income all your shares and managed investments have returned. This amount can be positive or negative depending on how well each investment has done. Negative amounts (i.e. losses) can be deducted from the total amount of income from you shares and managed investments. The following example explains how this works:
Example:
Say you held 1000 shares in Company B and 500 shares in Company C. The shares in Company B were worth $1.55 each and the rate of return was calculated as +15%. The shares in Company C were worth 90cents each and the rate of return was calculated as -22%. Income would be assessed as follows:
Income from shares in Company B =
1000 x $1.55 x 15% = $232.50
Income from shares in Company C =
500 x $0.90 x -22% = -$99.00
Assessable Income =
$232.50 - $99.00 = $133.50
What happens if I bought my shares at a high price some years ago, have made a gain over the past 12 months but still haven't recouped my losses since purchase?
To ensure that changes apply to all pensioners and allowees in the same way, the Department will not be taking into account the price of shares at the date they were first purchased. If the purchase price of each person's shares was considered, people with the same current financial resources would be paid different amounts of pension and allowance.
Using the purchase price would disadvantage many pensioners and allowees, as most would have earned capital gains, not losses, from the time they purchased their shares.
It is fair that pensioners with the same current share holdings and other financial resources receive the same amount of pension. To ensure this occurs, the Department will be only looking at share performance over the previous 12 months.
How often will Social Security reassess my income from shares?
The Department will automatically reassess share income every three months (January, March, July and September). You will also be able to advise of changes of circumstances, or seek a review between these times if you wish to get an immediate reassessment.
Will Social Security allow me any deductions from my shares' income?
Yes, your brokerage fees can be deducted from your share income for 12 months from the time they are incurred. They can only be offset against income from shares and managed investments.
When you are charged brokerage fees, you should contact the Department so that the amount you have paid can be deducted from your share income. There is no limit to the number of brokerage fees you can claim.
For More Information
If you would like more information about shares, Social Security have a free Financial Information Service (FIS). FIS Officers can explain, in detail, the new rules and how they are likely to affect your payments, as well as helping you identify the options available to you.
A FIS Officer in your area can be contacted by phoning Social Security TeleService on 13 2300 (pensioners), or 13 2468 (others). For information in languages other than English phone 13 1202. These calls can be made from anywhere in Australia for the cost of a local call.
Department of Social Security, Canberra
PR467.9305 May 1993
Source URL: https://clik.dva.gov.au/compensation-and-support-reference-library/departmental-instructions/1993/b441993-data-collection-and-processing-shares-review-forms-implementation-new-share-assessment-rules