Micro-economic reform is a primary objective of modern Australian socio-economic policy. The key outcome targetted by this reform is increased efficiency, measured by a range of factors, including cost reduction, increased savings, and a more facilitative environment for business activity. These benefits are sought by the proponents of reform as part of a push to increase national prosperity, but concerns that social equity is undermined by it are expressed by opponents of that reform. The debate between efficiency and equity is raging in current Australian tax policy, a key site for micro-economic reform. As Government Budget restructuring occurs in Australia, demographic change (eg, the ageing population) undermines the ability of public funded welfare to provide retirement benefits. Responsibility for self-funded retirement is an important contributor to increasing private savings. Investment in growth assets such as corporate stock is increasing in Australia, however concerns about volatility of asset values and yield stimulate the importance of investment risk management techniques. Financial contract innovation utilising financial derivatives is a dominant mechanism for that risk management. Synthetic equity products which are characterised by capital protection and enhanced yield are popular and efficient equity risk management vehicles, and are observed globally, particularly in the North American market. Financial contract innovation, risk management using financial derivatives, and synthetic equity products suffer from an adverse tax regulatory response in Australia, which deprives Australian investors from access to important savings vehicles. The negative Australian tax response stems from anachronistic legislation and jurisprudence, which emphasises tax outcomes based on legal form. The pinnacle of this approach is the tax law insistence on characterisation of financial contracts as either debt or equity, despite some important financial similarities between these two asset types. Since derivatives produce transactions with novel legal forms this approach is unresponsive to innovation. The negative tax result also stems from a perception that the new products are tax arbitrage vehicles, offering tax benefits properly available to investment in stocks, which is thought to be inappropriate when the new products resemble debt positions (particularly when they are capital protected and yield enhanced). The negative tax response reflects administrative concerns about taxpayer equity and revenue leakage. This approach seeks to impose tax linearity by proxy: rather than utilising systemic reform to align the tax treatment of debt and equity, the current strategy simply denies the equity tax benefits to a variety of innovative financial contracts. It deprives Australians of efficiency enhancing savings products, which because of an adverse tax result are unattractive to investors. The weakness of the current approach is illustrated by critical analysis of three key current and proposed tax laws: the ???debt dividend??? rules in sec. 46D Income Tax Assessment Act 1936 (the ???Tax Act???); the 1997 Budget measures (which seek to integrate related stock and derivative positions); and the proposals in the Taxation of Financial Arrangements Issues Paper (which include a market value tax accounting treatment for ???traded equity,??? and propose a denial of the tax benefits for risk managed equity investments). The thesis develops a model for financial analysis of synthetic equity products to verify the efficiency claims made for them. The approach is described as the ???Tax ReValue??? model. The Tax ReValue approach isolates the enhanced investment returns possible for synthetic equity, and the model is tested by application to the leading Australian synthetic equity product, the converting preference share. The conclusions reached are that the converting preference share provides the key benefits of enhanced investment return and lower capital costs to its corporate issuer. This financial efficiency analysis is relied upon to support the assertion that a facilitative tax response to such products is appropriate. The facilitative response can be delivered by a reformulation of the existing tax rules, or by systemic reform. The reformulation of the existing tax rules is articulated by a Rule of Reason, which is proposed in the thesis as the basis for the allocation and retention of the equity tax benefits. To avoid concerns about taxpayer equity and revenue leakage the Rule of Reason proposes a Two Step approach to the allocation of the equity tax benefits to synthetics. The financial analysis is used to quantify non-tax benefits of synthetic equity products, and to predict whether and to what extent the security performs financially like debt or equity. This financial analysis is overlayed by a refined technical legal appraisal of whether the security contains the essential legal ???Badges of Equity.??? The resulting form and substance approach provides a fair and equitable control mechanism for perceived tax arbitrage, whilst facilitating efficient financial contract innovation. The ultimate source of non-linearity in the taxation of investment capital is the differential tax benefits provided to equity and debt. To promote tax linearity the differentiation needs to be removed, and the thesis makes recommendations for systemic reform, particularly concerning the introduction of a system of ???Franked Debt.??? The proposed system of ???Franked Debt??? would align the tax treatment of debt and equity by replacing the corporate interest deduction tax benefit with a lender credit in respect of corporate tax paid. This credit would operate mechanically like the existing shareholder imputation credit. The interface of this domestic tax credit scheme with the taxation of International investment capital, and the problems occasioned by constructive delivery of franking credits to Australian taxpayers via synthetics, are resolved by the design and costings of the new system, which has the potential to be revenue positive.

Micro-economic reform is a primary objective of modern Australian socio-economic policy. The key outcome targetted by this reform is increased efficiency, measured by a range of factors, including cost reduction, increased savings, and a more facilitative environment for business activity. These benefits are sought by the proponents of reform as part of a push to increase national prosperity, but concerns that social equity is undermined by it are expressed by opponents of that reform. The debate between efficiency and equity is raging in current Australian tax policy, a key site for micro-economic reform. As Government Budget restructuring occurs in Australia, demographic change (eg, the ageing population) undermines the ability of public funded welfare to provide retirement benefits. Responsibility for self-funded retirement is an important contributor to increasing private savings. Investment in growth assets such as corporate stock is increasing in Australia, however concerns about volatility of asset values and yield stimulate the importance of investment risk management techniques. Financial contract innovation utilising financial derivatives is a dominant mechanism for that risk management. Synthetic equity products which are characterised by capital protection and enhanced yield are popular and efficient equity risk management vehicles, and are observed globally, particularly in the North American market. Financial contract innovation, risk management using financial derivatives, and synthetic equity products suffer from an adverse tax regulatory response in Australia, which deprives Australian investors from access to important savings vehicles. The negative Australian tax response stems from anachronistic legislation and jurisprudence, which emphasises tax outcomes based on legal form. The pinnacle of this approach is the tax law insistence on characterisation of financial contracts as either debt or equity, despite some important financial similarities between these two asset types. Since derivatives produce transactions with novel legal forms this approach is unresponsive to innovation. The negative tax result also stems from a perception that the new products are tax arbitrage vehicles, offering tax benefits properly available to investment in stocks, which is thought to be inappropriate when the new products resemble debt positions (particularly when they are capital protected and yield enhanced). The negative tax response reflects administrative concerns about taxpayer equity and revenue leakage. This approach seeks to impose tax linearity by proxy: rather than utilising systemic reform to align the tax treatment of debt and equity, the current strategy simply denies the equity tax benefits to a variety of innovative financial contracts. It deprives Australians of efficiency enhancing savings products, which because of an adverse tax result are unattractive to investors. The weakness of the current approach is illustrated by critical analysis of three key current and proposed tax laws: the ???debt dividend??? rules in sec. 46D Income Tax Assessment Act 1936 (the ???Tax Act???); the 1997 Budget measures (which seek to integrate related stock and derivative positions); and the proposals in the Taxation of Financial Arrangements Issues Paper (which include a market value tax accounting treatment for ???traded equity,??? and propose a denial of the tax benefits for risk managed equity investments). The thesis develops a model for financial analysis of synthetic equity products to verify the efficiency claims made for them. The approach is described as the ???Tax ReValue??? model. The Tax ReValue approach isolates the enhanced investment returns possible for synthetic equity, and the model is tested by application to the leading Australian synthetic equity product, the converting preference share. The conclusions reached are that the converting preference share provides the key benefits of enhanced investment return and lower capital costs to its corporate issuer. This financial efficiency analysis is relied upon to support the assertion that a facilitative tax response to such products is appropriate. The facilitative response can be delivered by a reformulation of the existing tax rules, or by systemic reform. The reformulation of the existing tax rules is articulated by a Rule of Reason, which is proposed in the thesis as the basis for the allocation and retention of the equity tax benefits. To avoid concerns about taxpayer equity and revenue leakage the Rule of Reason proposes a Two Step approach to the allocation of the equity tax benefits to synthetics. The financial analysis is used to quantify non-tax benefits of synthetic equity products, and to predict whether and to what extent the security performs financially like debt or equity. This financial analysis is overlayed by a refined technical legal appraisal of whether the security contains the essential legal ???Badges of Equity.??? The resulting form and substance approach provides a fair and equitable control mechanism for perceived tax arbitrage, whilst facilitating efficient financial contract innovation. The ultimate source of non-linearity in the taxation of investment capital is the differential tax benefits provided to equity and debt. To promote tax linearity the differentiation needs to be removed, and the thesis makes recommendations for systemic reform, particularly concerning the introduction of a system of ???Franked Debt.??? The proposed system of ???Franked Debt??? would align the tax treatment of debt and equity by replacing the corporate interest deduction tax benefit with a lender credit in respect of corporate tax paid. This credit would operate mechanically like the existing shareholder imputation credit. The interface of this domestic tax credit scheme with the taxation of International investment capital, and the problems occasioned by constructive delivery of franking credits to Australian taxpayers via synthetics, are resolved by the design and costings of the new system, which has the potential to be revenue positive.

Univ., Diss.--Frankfurt (Main), 2005. / Literaturverz. S. 283 - 300.

Agriculture is of inestimable value to South Africa because it is a major source of job creation and plays a key role in earning foreign exchange. The most significant contribution of agriculture, and in particular maize, is its ability to provide food for the nation. For a number of decades government legislation determined prices, and as such the trade of grains on the futures exchange requires market participants to adapt to a volatile environment. The research focuses on the ability of market participants to effectively mitigate price volatility on the futures exchange through the use of derivative instruments, and the possibility of developing risk management strategies that will outperform the return offered by the market. The study shows that market participants are unable to use derivative instruments in such a way that price volatility is minimised. The findings of the study also indicate that the development of derivative risk management strategies could result in better returns than those offered by the market, mainly by exploiting trends on the futures market. / Financial Accounting / M. Comm. (Business Management)

Corn production is scattered geographically over various continents, but most of it is grown in the United States. As such, the world price of corn futures contracts is largely dominated by North American corn prices as traded on the Chicago Board of Trade. In recent years, this market has been characterised by an increase in price volatility and magnitude of price movement as a result of decreasing stock levels. The development and implementation of an effective and successful derivative price risk management strategy based on the Chicago Board of Trade corn futures contract will therefore be of inestimable value to market stakeholders worldwide. The research focused on the efficient market hypothesis and the possibility of contesting this phenomenon through an application of a derivative price risk management methodology. The methodology is based on a combination of an analysis of market trends and technical oscillators with the objective of generating returns superior to that of a market benchmark. The study found that market participants are currently unable to exploit price movement in a manner which results in returns that contest the notion of efficient markets. The methodology proposed, however, does allow the user to consistently achieve returns superior to that of a predetermined market benchmark. The benchmark price for the purposes of this study was the average price offered by the market over the contract lifetime, and such, the efficient market hypothesis was successfully contested. / Business Management / D. Com. (Business Management)

The agricultural sector plays an important role in the South African economy through job creation and earning foreign exchange. The role of agricultural co-operatives increased substantially over the last few decades. The research focuses firstly on the identification of derivative instruments in the market and their applicability to mitigate financial risks co-operatives experience. Secondly, research is conducted about the extent to which co-operatives use these derivatives to hedge financial risks. The research shows that most co-operatives are exposed to financial risks through different activities. It is, however, evident that although the derivative instruments are available, not all co-operatives make use of these instruments. Recommendations for further research include the development of a risk management framework and determining the different economic factors that have an influence on the use of derivatives by South African agricultural co-operatives. / Business Management / M.Comm.

The agricultural sector plays an important role in the South African economy through job creation and earning foreign exchange. The role of agricultural co-operatives increased substantially over the last few decades. The research focuses firstly on the identification of derivative instruments in the market and their applicability to mitigate financial risks co-operatives experience. Secondly, research is conducted about the extent to which co-operatives use these derivatives to hedge financial risks. The research shows that most co-operatives are exposed to financial risks through different activities. It is, however, evident that although the derivative instruments are available, not all co-operatives make use of these instruments. Recommendations for further research include the development of a risk management framework and determining the different economic factors that have an influence on the use of derivatives by South African agricultural co-operatives. / Business Management / M.Comm.