DATE OF ISSUE: 09/06/92
VICTORIAN STATE GOVERNMENT BOND OFFER TO DEPOSITORS OF PYRAMID GEELONG AND COUNTRYWIDE BUILDING SOCIETIES
SUMMARY
1.- Victorian Government Bonds replace the principal value of Farrow building societies deposits as at 24 June 1990
-Asset value of bonds and retained building society deposits are the "market" value
-no income assessment for original holders
-income and assets tests apply to non-original holders.
BACKGROUND
2. The Victorian Government, through the issue of their bonds, guaranteed that Farrow group investors who accepted the offer would receive full repayment of their deposits in the Pyramid Geelong and Countrywide building societies as at 24 June 1990. The bonds do not cover interest received by the depositor after 30 June 1989.
3. The bonds are to be redeemed in instalments due each August, with a final payout on 31 August 1995. In some cases depositors may be paid out earlier.
4. Certificates have been issued to each bondholder showing the amount that will be outstanding as at the 31 August each year, after redemption amounts have been paid.
ASSESSMENT UNDER THE INCOME AND ASSETS TESTS
5. Treatment of the Victorian Government bonds under the department's income and assets tests is:
-an asset value equal to the market value of the bonds will be the basis of assessment. The market value is the value for which the bonds can be sold to major banks and financial institutions.
-original depositors who accepted the bond offer will only receive their original capital balance, which does not attract any income. The Minister has exempted these bonds held by original depositors only, from deeming provisions with effect from 17 April 1991.
6. Depositors who retained their original investments with the Farrow group of building societies will have the asset value of their funds set at the market value of the equivalent Victorian Government bond entitlement. Deeming of income has been exempted on these investments with effect from 1 March 1991.
7. In the case of Victorian Government bonds held by pensioners other than the original owner, the normal income test rules, including deeming, will be applied.
8. The following is a summary of the effect of the Victorian Government Bond issue on service pensions:
Income testAssets test Investment Realisation Value
Original building society — Exempted from "Market""Market"
deposits (bond offer not deeming with value equal — value or
taken up) effect 1/3/91 — to bonds — payout from
liquidation
proceeds
Original bondholders (offer Exempted from "Market" Partial
taken up by original bldg.deeming with — value — redemption
society depositors) effect 17/4/91 31 August
each year
comm. 1991
final.1995
Non-original bondholders — Income to be"Market"The same as
(purchased from original — at deemed rate — value — original
bondholders) bondholders
PETER HAWKER
NATIONAL PROGRAM DIRECTOR (BENEFITS)