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Macquarie Geared Equities Investment plus (GEI plus)

Features and benefits

If you want to take advantage of potential investment gains by using a limited recourse loan, consider the Macquarie Geared Equities Investment plus (GEI plus). With GEI plus, you can borrow to invest in over 50 ASX listed securities and certain unlisted managed funds with the benefit of having your loan principal protected.

What this means is at maturity your unprofitable GEI Securities may be disposed of on your behalf to repay that portion of the original Loan Amount referable to those GEI Securities. You will have no further obligations in relation to that portion of your loan. You will also receive the full benefit for any of the GEI Securities that have increased in value after the repayment of their Loan Amount and associated costs.

Some key features of GEI plus are outlined below. Before investing in the GEI plus, it is important that investors read and understand the terms and investment risks set out in the GEI plus Brochure dated 2 March 2011.

As well as protecting your Loan Amount, GEI plus offers:
100% finance
100 per cent of the funds for acquiring the investments is borrowed from Macquarie through a limited recourse interest only loan, so there is no need for you to contribute any initial capital or make any principal repayments during the loan term.1
Wide investment choice
With GEI plus, you can select your own portfolio from more than 50 ASX listed securities and certain unlisted managed funds, or you can choose a pre-selected portfolio. Go to the Brochures & forms tab and download and view the list of Approved Securities and pre-selected portfolios.
No offsetting of gains and losses

Rebate n/a
Closing Date n/a
Minimum Loan Amount $50,000
Investment Term 1 - 5 years
ATO Product Rulings 2011/5
2011/5A1
Brochure & Finance Application Form
Lonsec Research Approved
Approved List of Securities
Securities Selection Form
Macquarie Best Execution Obligations
Your gains from your "profitable" GEI Securities are not offset by losses from any unprofitable GEI Securities, which means your potential overall return is increased.
No margin calls
You will not be required to make additional payments as a result of a fall in the value of your GEI plus securities.
Potential tax efficiencies
Your loan interest may be deductible up to the applicable "benchmark rate", which is the Reserve Bank of Australia (RBA) Indicator Lending Rate for Standard Variable Housing Loans plus 100 basis points. For more information refer to Risks and tax.
More information

There are some key risks which investors in Flexi 100 should be aware of, including:

Interest Rates
Your interest rate will depend upon a number of factors including your choice of:
Pre-selected portfolios
Pre-selected portfolios are made up of predefined allocations across a selection of GEI Securities, and may be compiled by a member of the Macquarie Group or a third party. Examples of pre-selected portfolios that are currently available include: For more information, download and view the Approved List of Securities and pre-selected portfolio sheet above.
Risks and tax
Risks
Some key risks of an investment in GEI plus include:
Tax information
The following information is general and not specific to your own particular circumstances. We strongly recommend you discuss this with your taxation adviser.

Product rulings
In order to provide you with certainty regarding the tax treatment of interest paid on the Macquarie Geared Equities Investment plus (GEI plus), the ATO has issued various Product Rulings in relation to the GEI plus since the product was first offered. You may therefore be able to rely on a Product Ruling issued by the ATO where you entered into the GEI plus during the "period of application" (ie, the period from the issue of the ruling until its withdrawal) of one of these Product Rulings. Investors can generally continue to rely on a Product Ruling even after its withdrawal where they entered into the GEI plus during the Product Ruling's period of application.

The Product Rulings are only binding on the Commissioner of Taxation if your investment through the GEI plus is implemented in the specific manner provided in the applicable Product Ruling and the assumptions set out in that Product Ruling are satisfied. The Product Ruling is only a ruling on the application of taxation law and is in no way expressly or impliedly a guarantee or endorsement of the commercial viability of the GEI plus, of the soundness or otherwise of the GEI plus as an investment, or of the reasonableness or commerciality of any fees charged in connection with the GEI plus.

The Product Rulings specify how much of the GEI plus interest payments can be claimed as a tax deduction for "eligible investors" (i.e. those investors who, having regard to their personal circumstances, can rely on a particular Product Ruling). The table below assists you to identify which Product Ruling potentially applies to you and enables you to download the Product Rulings.

For those investors who may not be able to rely on a Product Ruling, please see "What is my level of tax deductibility?" below for a guideline as to how your interest deductibility should be calculated.

We recommend that investors visit the Australian Taxation Office's website for further details of how capital protected products and borrowings are treated.

PERIOD OF APPLICATION PRODUCT BROCHURE VERSION PRODUCT RULING
9 June 2004 to 30 June 2007 4 June 2004 2004/76
1 July 2007 to 22 July 2008 1 July 2007 2007/68
23 July 2008 to 26 May 2009 30 April 2008 2008/59
27 May 2009 to 8 March 2011 4 February 2009 2009/38
9 March 2011 to present 2 March 2011 2011/5

PR 2011/5 was updated on 5 October 2011 with an addendum (PR 2011/5A1) to reflect the change to the benchmark rate from the RBA’s Indicator Lending Rate for Personal Unsecured Loans to the RBA’s Indicator Lending Rate for Standard Variable Housing Loans plus 100 basis points. Please note that the update to PR 2011/5 does not affect previously issued Product Rulings.

How much of my interest is deductible?
The amount of your GEI plus interest payments that is deductible will depend on when you applied for your GEI plus, your loan term and whether you are paying a fixed or variable interest rate. You should refer to the applicable Product Ruling for further details.

Generally, if you entered into the GEI plus on or after 9.30pm on 16 April 2003 but before 1 July 2007, you can claim a deduction for your interest up to the lower of: Generally, if you entered into the GEI plus on or after 1 July 2007, you should be entitled to a deduction for the amount of interest payable on your GEI plus, less any amount that is reasonably attributable to the cost of capital protection. The amount that is reasonably attributable to capital protection is currently calculated in the following way:
  1. Calculate the total costs you incur under or in respect of the GEI plus for the income year, ignoring amounts that are not in substance for capital protection or interest
  2. Apply the Reserve Bank of Australia's Indicator Rate for Variable Personal Unsecured Loans to your loan amount under the GEI plus:
    • If your borrowing is at a fixed rate for some or all of the loan term, you would apply the Indicator Variable Interest Rate at the time the first of the amounts in Step 1 was incurred for the term, or that part of the term, or
    • If your borrowing is at a variable rate for some or all of the loan term, you would apply the average of the Indicator Variable Interest Rates during the term, or part of the term.
  3. Where the amount under Step 1 exceeds the amount under Step 2, the excess is attributed to the cost of capital protection for the income year. If the securities you purchased using you GEI plus are held on capital account, the excess is a capital cost and will not be deductible.
Legislation was passed in June 2011 which changed the benchmark rate applicable to those investors who entered into the GEI plus on or after 7.30pm on 13 May 2008. As a result of this change, the amount that is reasonably attributable to capital protection for those investors will be calculated in the following way:
  1. Calculate the total costs you incur under or in respect of the GEI plus for the income year, ignoring amounts that are not in substance for capital protection or interest
  2. Apply the Reserve Bank of Australia's Indicator Lending Rate for Standard Variable Housing Loans plus 100 basis points to your loan amount under the GEI plus:
    • If your borrowing is at a fixed rate for some or all of the loan term, you would apply the Indicator Variable Interest Rate at the time the first of the amounts in Step 1 was incurred for the term, or that part of the term, or
    • If your borrowing is at a variable rate for some or all of the loan term, you would apply the average of the Indicator Variable Interest Rates during the term , or part of the term.
  3. Where the amount under Step 1 exceeds the amount under Step 2, the excess is attributed to the capital protection for the income year. If the securities you purchased using your GEI plus are held on capital account, the excess is a capital cost and will not be deductible.
The Reserve Bank of Australia's Indicator Lending Rate for Standard Variable Housing Loans plus 100 basis points will also apply from 1 July 2013 to any investors who entered into the GEI plus on or after 1 July 2007 whose loan is still in existence on 1 July 2013.

If as a result of the change to the benchmark rate you are required to amend your income tax returns, you have until 29 June 2013 to do so.

Please visit the Australian Taxation Office's website for further details of how capital protected products and borrowings are treated.

What are the Reserve Bank of Australia's Indicator Rates?
The applicable Reserve Bank of Australia's Indicator Rate used to determine the deductibility of interest on your GEI plus will generally depend on when you entered into the GEI plus.
The Reserve Bank of Australia publishes the monthly Indicator Rates six to eight weeks after the end of the applicable calendar month. Current Indicator Rates are available on the Reserve Bank of Australia's website www.rba.gov.au

Important information Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice contained in this website and before making any investment decision we recommend that you consider whether it is appropriate to your situation and seek appropriate financial, taxation and legal advice. If an offer document is available for a product referred to on this site, you should read it before making any investment decision.

Except for Macquarie Bank Limited (MBL) (Australian Credit Licence (ACL) 237502) ABN 46 008 583 542, any Macquarie entity referred to on this page is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Cth). That entity’s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise.

1 You will be required to make your interest payments throughout the term of your GEI Plus Facility. Further, in the event of some corporate actions you may be required to make additional contributions from your own funds.
2 GEI plus is a structured limited recourse loan. Due to the limited recourse nature of the loan your loan principal amount is capital protected. This means that if, at the time your loan principal amount becomes repayable, the value of your GEI Securities is insufficient to repay your loan principal amount in full, you will not need to provide any additional capital to repay your Loan Amount. However you will have to pay any outstanding interest and other costs.
3 In certain circumstances Macquarie may require reinvestment of Distributions. Please refer to the GEI Plus Brochure dated 2 March 2011 for additional information.

Macquarie does not make any representations regarding the GEI Securities or the pre-selected portfolios included on the Approved List of Securities, their suitability or their performance. The inclusion of any GEI Securities or pre-selected portfolios on the Approved List of Securities shall not be construed as the provision of financial advice in relation to those GEI Securities and pre-selected portfolios. Investors should obtain their own financial advice as to the suitability of investing in any GEI Security or pre-selected portfolios as to their suitability in light of their financial objectives, situations and needs.

Past performance of any product described on this site is not a reliable indication of future performance.

The above information has been prepared by Macquarie, the loan provider for the Macquarie Geared Equities Investment plus (GEI plus). GEI plus is offered under a brochure dated 2 March 2011 which is available above. Before making any investment decision, investors should obtain the GEI plus brochure and consider its contents. Macquarie recommends investors obtain financial, legal and taxation advice before making any financial investment decision.

Macquarie does not make any representations regarding the GEI Securities, their suitability or their performance. You should obtain your own financial advice as to the suitability of investing in the GEI Securities in light of your financial objectives, situations and needs.

The loans offered under GEI plus are subject to approval.