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Glossary of TermsClick on the Term below to view the definition.Adjusted Taxable Income This term is used in relation to the superannuation surcharge. It includes most income that is shown on your personal tax return plus all employer and deductible personal superannuation contributions and also includes part of employer ex gratia amounts paid on termination of employment and rolled over. top All Ordinaries (All Ords) The All Ordinaries measure the level of share prices at any given time for a sample of major companies listed on the Australian Stock Exchange. Stock exchanges in other countries have similar indices, e.g. Dow Jones (New York), FTSE (London) and Nikkei Dow (Tokyo). top Allocated Pension An Allocated Pension is an investment through a superannuation fund that is intended to provide a stream of future income payments for a retiree. The superannuation fund can include those provided by a fund manager but can also include a Self Managed Super Fund. The money used to create or purchase an Allocated Pension is used to invest in assets, such as shares, fixed interest, managed funds, property etc. with the objective that the resulting income and possible capital gains will fund the pension payments. These payments are contracted to be at certain intervals such as monthly or annually and will normally be structured to continue for the life of the retiree. Allocated Pensions can play an important role in wealth management and retirement planning because of the regular income they can provide. In addition, for Australian residents there are certain advantages for retirees under the Centrelink Income test and the payments received may carry some tax benefits. top Annuity Private pension offering tax and Social Security advantages. Issued by life insurance companies and friendly societies. top Approved Deposit Fund (ADF) Introduced in 1984 as an “approved” fund for receipt of superannuation lump sums. Due to subsequent legislation changes, superannuation funds can offer the same facilities so ADF’s have become less relevant. top ASIC Acronym for Australian Securities and Investments Commission, the government body responsible for regulating companies, the issue and sale of shares and trust units and company borrowings and investment advisers and dealers, in accordance with the Corporations Law. top ASX The Australian Stock Exchange (ASX) top At Market Type of order by an investor to buy or sell shares at the market price at the time the order is given. Similar to 'at best' which is an order to buy or se[I at a price to be determined at the adviser's discretion. top Average Weekly Ordinary Time Earnings The changes in AWOTE is often used as an index for annually increasing certain thresholds. top Bear Market A falling market. A “bear” claws market prices down. top Beneficiary A person who is entitled to or is receiving benefits from a fund. Normally it is the member, but can include dependents who are nominated. top Bid The price at which someone is prepared to buy shares. Also known as “buyer” or “buying price”. top Blue Chip Shares, usually highly valued, in a major company known for its ability to make profits in good times or in bad, and with reduced risk or default. top Bonus Shares / Bonus Issue Additional shares issued by the company to existing shareholders for free, usually in a pro-determined ratio to the number of shares already held. top Brokerage Fee paid to stockbroking firm for buying or selling of shares. top Bull Market A rising market. A “bull” tosses market prices up. top Call Often No Liability (N.L.) and sometimes Limited Liability (Ltd.) companies have shares that are not fully paid. A call may be for the payment of part, or all, of this outstanding capital. Holders of shares in a N.L. company may choose not to pay the call and forfeit their shares. Holders of shares in a Limited Liability company are legally obliged to pay a call. top Capital Gains Tax Tax on the profit form the sale of capital assets such as shares. top Capital Raisings The amount of ‘new’ money raised on ASX from the public, both individuals and institutions (e.g. Life Insurance Companies, Pension Funds, Superannuation, Banks, etc.). top Capitalisation In sharemarket terms, this is the value of a company - calculated by multiplying its current share price by the number of shares on issue. top Cash Issues A new issue of shares made to existing shareholders in proportion (e.g. 1 new share for every 2 shares held) to their existing shareholding for the purpose of raising additional capital for the company. It is usually issued at a discount to the market price. top CHESS CHESS stands for Clearing House Electronic Sub-Register System. Under this system, a proportion of a company's shares are held on a sub-register managed by ASX Settlement and Transfer Corporation Pty Ltd, a subsidiary company of the ASX. Sales and purchases of those shares can therefore be registered simultaneously and electronically. This allows much faster and more efficient transfer of ownership of shares and settlement of the buy and sell payments than was the case when change of share ownership involved the transfer of paper share certificates. top CHESS Sponsored Shares If your shares are CHESS Sponsored, which is the preferred approach of Prescott Consultants, your ownership of those shares is registered with CHESS. This means your transactions can be made more efficiently and at less cost while your stockbroker has a much better idea of what shares you own. An advantage of the latter is that as a client of CSFBAEP and Prescott Consultants, you can view your current CHESS sponsored shares and their current market value on-line through the Prescott Consultants website. You register your shareholdings by signing a Sponsorship Agreement Form with your stockbroker, which is then known as the Sponsoring broker. You are then given a unique Holder Identification Number (HIN) which is linked to your sponsoring broker. top Chief Entity A company which holds over 50% of another company’s voting rights and therefore is the controlling shareholder (also refer to Substantial Shareholder). top Commutation The conversion of all or part of an annuity or pension to a Lump Sum. top Complying Pension / Annuity A pension or annuity which meets certain conditions, in particular it cannot be commuted to a lump sum. Provides a guaranteed income for life or a fixed term. Main advantage is exemption from Social Security Assets Test (but not Income Test). Also receives favourable treatment under Reasonable Benefit Limits system. top Concessional Component This part of an ETP relates to bona fide redundancy, invalidity and approved early retirement payments made before the 1st July 1994. No new Concessional Componenets created after the 30th June 1994. top Consumer Price Index (C.P.I) The Consumer Price Index, an indication of the inflation rate. top Contract Note A written document confirming a transaction between two dealers or a broker and a client which details the costs, type and quantity of shares traded. top Contributing Share Document sent by a stockbroker to a client confirming a purchase or sale, showing details of the transaction, price, brokerage and other charges involved. top Convertible Note A share which is partly paid, i.e. not fully paid. top Cum Meaning “with”, e.g. “cum dividend” indicates that shares are being traded with the current dividend attached and so the buyer rather than the seller receives it. (See Ex). top Debenture A loan made to a company for a fixed period of time at a fixed rate of interest. The loan is secured by a charge over the company’s assets. top Deductible Amount That portion of income from an annuity or superannuation pension which is deemed to be a return of capital and therefore not subject to Income Tax or the Social Security Incomes Test. top Deduction (Tax) Amount that can be deducted from gross income before calculating the amount of tax that is payable. top Deferred Annuity (DA) A rollover investment where the receipt of the annuity payments is deferred until a later date. top Deferred Annuity (DA) A rollover investment where the receipt of the annuity payments is deferred until a later date. top Discretionary Trust A trust where the trustee can allocate income and assets to any one or more of a list of beneficiaries. top Diversification Spreading investments over a variety of investment categories in order to reduce risk, You may also invest in different countries to spread your risk. top Dividend Imputation The tax credits passed on to a shareholder who receives a franked dividend. Under provisions of the income Tax Assessment Act, imputation credits entitle investors to a rebate for tax already paid by an Australian company. top Dividend Rate The dividend shown as cents per share. This figure may be followed by f, which means fully franked or p, which means it has been partly franked. top Dividend Yield top Dividends A dividend is the share of profits made by the company which is paid to its shareholders. This payment is normally out of its after-tax profits and generally relates to the half yearly or full year profit of the company. Depending on the company's circumstances, some of the profits from previous years, called the retained earnings, may also be used to pay the dividend. A dividend paid following the half yearly result will be called the Interim dividend while the dividend following the full year result is called the Final Dividend. The dividend will be "declared" as a payment of a certain number of cents per share. Dividing the number of cents per share paid as dividend over the previous twelve months by the current share price gives the current dividend yield, as is reported in the press. On average, across all the companies listed on the Australian Stock Exchange, the dividend yield averages around 3 - 4%. That is, the value of dividends paid over any twelve month period is equivalent to 3 - 4% of the value of all of the shares of all the companies listed. When the dividend is announced, also announced will be the date on which the dividend is to be paid. Another important date is the ex-dividend date. Shares traded before that date are known as cum-dividend as the dividend is "cumulated" in the share and will be paid to the new owner. Shares traded after that date are known as ex-dividend as the dividend will be paid to the previous holder, not the new owner. top Eligible Service Period (ESP) Years of service with an employer and/or as member of super fund and/or rollover fund – measured in days pre ’83 and post ’83. top Eligible Termination Payment (ETP) Comprises superannuation payment, accumulated sick leave, invalidity, ex-gratia payments, payments on commutation of an annuity/pension and withdrawals from rollover funds. Excludes payments for unused long service and annual leave. top Employer Fund Employer sponsored superannuation where your employer contributes to a superannuation plan on your behalf. top Equities In sharemarket terms, equities is a synonym for shares and represents part-ownership of a company, as distinct from debt securities such as bonds and debentures. From a business perspective, equities represent the total interests of parties in the assets of that business entity. Lenders and creditors have a 'specific entity', and owners have 'residual' equity. top Ex Means “without” e.g “ex-dividend” indicates the shares are being traded without the current dividend which is retained by the seller. Shares trading without a current bonus or rights issue attached are also quoted “ex”. (See Cum). top Ex Gratia Payment An ETP made by an employer on termination of service. top Excess Benefits Tax Tax that is payable when your superannuation/rollover benefits exceed your R.B.L – Reasonable Benefit Limit. top Exempt Income Income that is exempt from taxation. top Face Value The amount at which securities are issued. top Fiscal Government spending and taxation policies. top Float The initial raising of capital by public subscription to securities, such as shares offered on the sharemarket for the first time. More recently called Initial Public Offerings (IPOs). top Franked Dividend A dividend paid by a company out of profits on which the company has already paid tax. The investor is entitled to an imputation credit, or reduction in the amount of income tax that must be paid, up to the amount of tax already paid by the company. top Funded Benefit Benefit coming from a Superannuation scheme to which there have been ongoing contributions by employees and/or employers. Government schemes are often unfunded. Private sector schemes are funded. top Golden Handshake This is a lump sum payment made by an employer on termination of service in recognition of services rendered by an employee, sometimes specified in a contract. top Highest Average Salary (H.A.S) The average of the three highest consecutive years of salary received during your working life. top HIN A Holder Identification Number is allocated by your stockbroking firm when you buy shares if you nominate them as your sponsor in CHESS. top Income Securities top Income Splitting Term used to describe the practice if dividing a flow of income between two or more people, usually the partners of a couple. top Indexation Adjustment for Inflation top Initial Public Offering The initial raising of capital by public subscription to shares in a company. (See Float) top Invalidity Component The part of an Invalidity Payment which is exempt from tax. top Invalidity Payment A payment in respect of invalidity by a superannuation fund or directly from an employer. top IPO Stands for 'initial public offering', which is when a company lists on the stock exchange for the first time, thereby allowing the public to buy its shares. A company can list 100% of its securities through an IPO, or just a portion. top Issuer Sponsored top Levies Levies are calculated and added to the tax payable eg Medicare Levy top Listed Associate Companies Companies listed on the Stock Exchange and which another company owns over 20% of voting rights and less than 50%, thereby being an associate. top Listed Company A Company which has agreed to abide by ASX Listing Rules so that its shares can be bought and sold on ASX. top Lump Sum Tax Tax payable when funds are withdrawn from the superannuation or rollover system. top Managed Fund top Marginal Tax Rates Also referred to as “Tax Brackets”. Tax rates increase in a graduated scale. Income is taxed at the rate applicable in each band. top Market Capitalisation The total number of shares on issue multiplied by their market price. This can be applied to work out the market value of one company or of the value of all companies listed on the exchange. top Market Linked Fund The value of the fund fluctuates in line with the value of the underlying assets. top Market Price The prevailing price of shares traded on ASX. May be the last price at which the shares traded, or the most recent price offered or bid for the shares. top Master Fund A superannuation fund which has one trustee deed that allows a number of companies or individuals to join. Investment may be spread across a number of managers. top Monetary Policy One arm of the economic policy, which relates to controls over interest rates and the money supply (cash, deposits with banks, building societies, finance companies and merchant banks). top New Recently issued shares are quoted as 'new' when they do not rank equally with existing shares in terms of dividends top Non Rebatable Pension A pension/annuity purchased with a benefit which is in excess of the RBLs (Reasonable Benefit Limits). The income is fully assessable for tax and does not receive a 15% tax rebate. Pensions from some Government Schemes which are not pre-funded are also non-rebatable. top Offer The price at which someone is prepared to sell shares. top Off-Market Transfer The transfer of shares between parties without using a stockbroking firm as the intermediary. Off-market transfers are executed through the use of an 'Australian Standard Transfer Form'. top Options The right to take up certain shares on specified terms within or at a specified time. top Ordinary Share The most commonly traded security in Australia. Holders of ordinary shares are part-owners of a company and may receive payments in cash, called dividends, if the company trades profitability. top Pension Social Security Income from the Department of Social Security (D.S.S) for one of the many pensions available i.e. Age, Disability, Blind etc. top Pension Superannuation Regular income payments received from a superannuation fund after you have retired. top Personal Superannuation Available if your are gainfully employed and over 16 years of age. You can contribute whether or not you belong to an employer sponsored fund. top Placement An allotment of shares(or less typically, debentures, bonds etc) made directly from the company to the public or to selected institutional or private investors. top Preserved Benefit A superannuation benefit which cannot be cashed by an employee until the employee has reached preservation age (generally 55 at present) and has retired from the workforce permanently. top Price Earnings Ratio top Price Range for the Day The highest and lowest price at which a share traded over the course of a day. top Productivity Superannuation Payments under an award made by an employer to a superannuation fund on behalf of an employee. This payment is ratified by arbitration. Currently set at 3%. top Property Syndicates top Property Trusts - Listed top Property Trusts - Unlisted top Prospectus The document issued by a company or fund setting out the terms of its public equity issue or debt raising. This provides the background and financial and management status of the company or fund, subject to the requirements of the ASX Using Rules and the Corporations Law. top Qualifying Annuity An annuity which allows you to use the much higher pension R.B.L. It must be for the life, have no Residual Capital Value and be indexed to at least 5%. top Reasonable Benefit Limits (RBLs) The maximum amount of benefit that can be received taxed at the “concessional” rates applicable to ETPs and rebateable pensions. top Rebatable Pension A pension/annuity purchased with a benefit which is within the RBLs (Reasonable Benefit Limits). The income receives a 15% tax rebate. top Rebates There are many types of tax rebates. These are calculated and taken away from the amount of tax payable. top Reconstruction This includes share splits, consolidations, capital reductions (partial repayments) schemes of arrangement and name changes. In the case of capital reductions and schemes of arrangement, each require 75% majority approval at a general meeting and subsequent court approval. top Reportable Fringe Benefits Commencing from the 1999/2000 tax year, employers must report the ‘grossed-up value’ of most fringe benefits on Group Certificates. For example the value of fringe benefits provided in the period 1 April 2000 to 31 March 2001 will be shown on the 2000/2001 Group Certificate. top Residual Capital Value (R.C.V) The lump sum benefit payable at the end of the annuity contract or upon death of the annuitant. top Reversionary Annuitant This person is nominated in the immediate annuity contract as the person to continue receiving the annuity payments on the death of the original annuitant. top Reversionary Pension A pension that provides further benefits to a spouse on the death of the original pensioner. top Rights Issue A privilege granted to shareholders to buy new share in the same company, usually below the prevailing market price. top Rollover The investment of an Eligible Termination Payment (ETP) into Deferred Annuities (DAs), Approved Deposit Fund (ADFs), Immediate Annuities or Superannuation Fund. top Rollover Fund A tax favoured investment to encourage people to save their termination benefits for their retirement. Includes Approved Deposit Funds, Deferred Annuities and Annuities. top SEATS An acronym for the Stock Exchange Automated Trading System - the computer system used by the Australian Stock Exchange for trading securities. It gives stockbrokers immediate access to the market, regardless of their lcoation, via screens located in brokers' offices Australia-wide. top Securities A general term applied to shares, debentures, notes, bills, government and semi-government bonds etc. top SFE Short for Sydney Futures Excahnge, a market where professionals trade contracts to deliver a parcel of shares at a future specified date. top Share An equity or part ownership of a company. top Share Buy-Back Also referred to as a 'share repurchase', when a company buys back its own shares from existing shareholders to restructure its capital base. top Share Register A register that records all shareholders in a company, as well as the number of shares held by each shareholder. top Shareholder A person, or an entity, that owns part of a company. In return, the company pays the shareholder a portion of its profits in the form of an annual dividend. Shareholders may also profit when the company's share price rises over a period (capital gain). top Sharemarket The official market where professionals trade shares and other securities on behalf of the public or institutional investors. top SRN A Security-holder Reference Number is allocated to you when you buy shares in a company and nominate that company as your sponsor on a share subregister. top Stamp Duty Duty payable to State governments on share transactions. Statement of Termination Payment (S.T.P) The form used by the employer or Rollover Fund to show the amount and break-up of the various components of the termination payment. top Substantial Shareholder A person/company which holds a relevant interest of over 5% of the company’s voting rights. This includes the direct or indirect reference to power or control. Information included in this table is compiled from substantial shareholder notices and may not necessarily reflect recent interest/s in shares held in the company at date of publication. top Surcharge A superannuation surcharge of up to 15% applies to employer superannuation contributions and deductible personal superannuation contributions and part of an employer ex gratia termination payments for higher income earners. top Tax Year 1st July to 30th June top Taxable Income Income that is subject to taxation. top Term Certain Annuity A type of annuity contract where the term of the contract is for a specified period e.g. 5 years and continuation of payments does not depend on whether a person is alive or not. top Trust An investment structure in which many individual investors combine their funds to create a large pool of money. top Trustee The person or company responsible for protecting investments of people who invest in a trust. top Undeducted Contributions Amount of money you have personally contributed to a superannuation fund since 1st July 1983 and have not claimed as a tax deduction. top Undeducted Purchase Price (UPP) Refers to the capital component of the annuity. For a non-ETP annuity it is the total purchase price. With an ETP annuity it is generally the undeducted contributions. top Unfunded Source A source which has not paid the 15% contributions tax (e.g. employer payments or some Government superannuation funds). This is an “untaxed” payment. top Untaxed Payments This refers to payments from employers and superannuation funds that have not been subject to the contributions tax. On rolling over part of the Post ’83 component is subject to a 15% entry tax, after which the benefit is treated as a “taxed” benefit. top Vesting Employer contributions to a superannuation fund where ownership is passed immediately or over a period of time to the employee. top Working Capital Comprises current assets less liabilities. top |
