Loans
A loan is a financial asset, especially money, which is lent, on the condition that it be returned, usually with interest.
How to apply deeming to loans
Examples of loans affected by deeming
Loans for deeming include the following:
- bonds,
- bank bills, commercial bills and promissory notes,
- loans to family members,
- loans to trusts or companies, and
- loans to any other individual, group or corporation.
Bank bills, commercial bills and promissory notes
Bank bills, commercial bills and promissory notes are generally short term 'discounted' securities. In other words, instead of earning interest, the bill or note is issued at a discount from the face value, and the holder receives the face value when it matures. The discount rate is generally expressed as a rate of interest. A pensioner, for example, may buy a $100.00 promissory note for $80.00 and redeem it for $100.00 on maturity, therefore receiving a $20.00 profit.
How to apply deeming to bank bills, commercial bills and promissory notes
Debentures and unsecured notes
Debentures and unsecured notes are loan certificates issued by companies to investors from whom they are borrowing money. The investment provides a return in the form of interest. The following table provides some additional information about unsecured notes and debentures.
How deeming is applied to debentures and unsecured notes
|
Investment |
Description |
|
Debentures |
Debentures are secured by a lien over certain assets of the borrowing company. They usually have a fixed:
|
|
Deferred interest debentures |
Interest on deferred interest debentures:
|
|
Unsecured notes |
These are unsecured because no assets are charged as security for the loan. |
Bullion investments
The following table lists assets that are included as bullion and those that are not.
|
If an asset is held for... |
Then it is... |
|
Investment purposes and is one of the following:
|
bullion |
|
Non-investment purposes and is one of the following:
|
not bullion |
Income Equalisation Deposits
Income Equalisation Deposits are a means by which those operating in the rural sector can smooth out their taxable income over a number of years. The Income Equalisation Deposit scheme allows a primary producer to make a deposit of surplus funds with the Department of Primary Industry and Energy. The primary producer's taxable income in the tax year when the deposit was made is reduced by the amount of the deposit. The deposits attract an annual interest payment, which is regarded as income for taxation purposes when withdrawn. Income Equalisation Deposits are regarded as financial investments.