Macquarie welcomes new Product Ruling on protected loan

11 June 2004

Macquarie Margin Lending division has received a new Australian Taxation Office (ATO) Product Ruling this week for the Geared Equities Investment plus (GEI plus). This gives investors, whose circumstances are covered by the terms of the Product Ruling, tax certainty over several flexible new product features.

The Product Ruling, PR 2004/76*, is specific to the Macquarie GEI plus - a product that has been at the forefront of the evolution and growth of the protected loan market in Australia for the past decade.

According to Mickey Perret, Head of Macquarie Margin Lending, the Ruling is a real win for investors seeking increased flexibility in capital protected products.

“For the first time, eligible investors can access a ‘no cash outlay’ loan by borrowing their first year’s interest; or fix and pay their investment interest monthly in arrears; or invest in index funds such as the ‘streetTRACKS S&P/ASX 200’ – all with the tax certainty covered by the terms of the Product Ruling.”

“By using these optional features investors increase the flexibility of their investment without impacting the tax deductibility of their interest payments. Under ATO rules, a large part (up to 85 per cent) of the interest paid is tax deductible for eligible investors while the remaining ‘non-deductible’ interest component can be used to reduce any capital gain on disposal of the shares or units.”

The GEI plus is an interest-only loan of at least $50,000 that allows the investor to hand-pick a share portfolio from over 80 leading listed Australian companies. At the end of the loan period if the shares go up, the investor reaps all the rewards, including 100 per cent of all capital gains.

If at the end of the loan period, any particular share has fallen in value, you may put the share back to Macquarie at its original share purchase price to extinguish that portion of the loan in full.

For further information please contact:

Mickey Perrett
Division Director
Macquarie Margin Lending
Tel: (612) 8232 6965

Matthew Russell
Public Relations
Macquarie Bank Limited
Tel: (612) 8232 4102
Mobile: (614) 1069 9532

*The Product Ruling refers only to the application of taxation laws to the GEI plus and does not represent an endorsement by the ATO of the commercial viability or of the soundness of the GEI plusas an investment, or of the reasonableness or commerciality of any fees charged. The Product Ruling is only binding on the ATO if the circumstances of the investor entering into the GEI plus are as described in the Product Ruling under the heading “Arrangement”.