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Description - Loans, Bills, Debentures, Notes, Bullion & Equalisation Deposits


A loan is a financial asset, especially money, which is lent, on the condition that it be returned, usually with interest.    

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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.    

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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.    

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Debentures are secured by a lien over certain assets of the borrowing company. They usually have a fixed:

  • maturity date,
  • capital value, and
  • rate of interest, payable quarterly.

Deferred interest debentures

Interest on deferred interest debentures:

  • is deferred until maturity, and
  • may be calculated on a compounded basis, which means that it is calculated, not only on the original capital, but also on the interest previously earned.

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.    

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If an asset is held for...

Then it is...

Investment purposes and is one of the following:

  • gold, silver and platinum bar, ingot and nugget holdings, or
  • coins, medals and decorations containing those metals


Non-investment purposes and is one of the following:

  • jewellery or contemporary Australian currency which contains gold, silver or platinum, or
  • coins, medals, decorations containing those metals

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.    

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The following investments all meet the definition of a loan:

  • debentures,
  • government and semi-government bonds,
  • bank bills
  • commercial bills,
  • non-convertible notes, and
  • capital notes.

Note – a person is not treated as having made a loan merely because:

  • the person has an account with a financial institution, or
  • the person has paid an entry contribution.



According to section 5J(1) of the VEA a financial asset means;


According to section 5L of the VEA a family member, in relation to a person, means:

  • the partner, father or mother of the person, or
  • a sister, brother or child of the person, or
  • another person who, in the Commission's opinion, should be treated as one of these relations for the purposes of this definition.

Please note, the definition of a parent is further defined in section 10A of the VEA.