The term “investment accounts” is a relatively new term.
In its simplest form, an investment account is a loan from the Government to an individual or company that will repay the loan over time.
The term itself is also sometimes referred to as a “debt” or “bond” because the government will pay the interest on the debt over time to pay off the loan.
This has been the case since the 1930s, when the US government used its money to buy bonds issued by the US Treasury.
In Australia, the Government does not currently issue any debt-based investment accounts.
However, it does have an obligation to “provide adequate funding to the financial institutions and non-financial institutions for the purposes for which the investment account has been set up”, according to the Financial Services Act 2001.
The legislation says that an investment company or bank can set up an investment trust that can “providing adequate funding” to its investors for “the purpose for which an investment interest was set up”.
Investment accounts are available to any person or entity that has been issued a “financial interest” from the Commonwealth, and the Government can also set up the account if it wants to.
In most cases, an investor will need to have a minimum net worth of $10,000 to qualify.
However a small number of investors will qualify for an investment accounts, and these can also have an annual limit of $100,000.
What are the requirements?
To qualify, an interest-free account has to be set up.
An investment account may also be used to pay the income tax that an investor pays, or to pay other taxes that the investor may have to pay.
The investment account must be established in the same way as a bank’s.
A deposit account or other financial institution that will be managed by the Government will also need to set up a trust to manage the investment, and have an investment policy and other financial requirements.
An interest-only investment account does not need to be a bank-owned account.
The amount of money a person or organisation can invest in an investment will depend on whether they have a qualifying net worth.
In other words, an individual who has a net worth less than $20,000 can invest an unlimited amount in an interest free investment account.
If a person has a minimum $10.5 million net worth, then an investment of that amount will be considered a “qualified” investment.
The interest rate on the investment is set by the Minister, and varies depending on the amount of the loan and the maturity of the investment.
In the case of a loan, the interest rate is set at a fixed rate of 6.25 per cent.
However in the case the loan is a security, the rate can be set at the lower of 5 per cent or 3 per cent per annum.
What does the interest mean?
If an interest is paid, the value of the interest is added to the value the loan gives up to the end of the next financial year.
The Government sets the interest rates on its investment accounts and the terms of the arrangement.
If the interest payment is not paid within a specified period, the amount paid by the investor is not counted in the next year.
If an investor does not pay the balance of the balance in full within a fixed period, that interest is not added to their interest income.
If there is no interest payment within a certain period, a small amount is deducted from the value earned by the investment over the next 12 months.
For example, if a $10 million investment account was set-up with an interest rate of 5.75 per cent, and that interest payment was not paid in July, the remaining balance over the 12 months would be $5 million.
If interest payments are not paid over the term of the account, then the amount earned over the remaining term of a fixed term will be included in the investor’s interest income in the year in which the interest payments were paid.
However if there is a loss, the loss can be taken into account as part of the investor ‘s income in subsequent financial years.
Where does the money come from?
The interest payments must be made on a fixed-term loan.
The loan can be an existing loan or a new loan.
If it is a new lending facility, the lender must provide the investor with a written undertaking that it will pay off all outstanding loan balances in full in the period for which it is lending the money.
If not, the money will be returned to the investor at the end to allow them to make repayments.
The money must be paid in instalments.
Payments may be made over a fixed length of time, but the interest will only be paid on the first payment.
For more information, read about interest rates.
The Australian Government says that it does not have to repay all interest paid on an investment, but it must repay a proportion of it.
The percentage can be calculated by dividing the annual amount of interest that has already been paid by 100
