Stay of execution for bonds
Friendly society funeral, education and income bonds have been granted a short reprieve from being taxed, and the industry is continuing to fight for tax-exemption.
Friendly society funeral, education and income bonds have been granted a short reprieve from being taxed, and the industry is continuing to fight for tax-exemption.
As reported in Money Management, these bonds were put in jeopardy by a Ralph Review proposal to change their taxation status.
Australian Friendly Societies association executive director Martyn Pickersgill says the industry is not happy with Treasury's response to its lobbying.
"While the announcement is slightly better than September ruling, it is not a satisfactory result for us," he says.
The new Treasury ruling makes bonds sold after November 30 subject to tax at the company rate, but only from June 30, 2001. Until then, income from bonds sold after the end of November will be exempt from tax.
Deferring the introduction of taxing these bonds from September is to allow the friendly societies to develop new disclosure documents for the products.
Pickersgill says the announcement only allows friendly societies five weeks to meet this requirement.
The friendly societies are also to pay tax on investment income earned on funeral and education bonds from July, 2001. Investors will receive imputation credits for the tax paid by the friendlies. The reasoning behind this move is to ensure tax is paid at the marginal rate for taxpayers.
Pickersgill says lobbying will continue with the Democrats and the Opposition as well as with the government.
Recommended for you
Investment solution provider Channel Capital has appointed James Archer as its latest distribution director, joining from Pinnacle Investment Management.
Bennelong Funds Management has signed a memorandum of understanding with US private credit manager Monroe Capital to distribute its products in Australia.
Global equity manager Talaria Capital has appointed a Sydney-based sales director as it grows its distribution presence across Australia.
Global private markets firm Partners Group has launched an evergreen fund to provide Australian advisers with access to its cross-sector royalties strategy.
