Westpac Self-Funding Instalments
Westpac Self-Funding Instalments (Westpac SFIs) give investors leveraged exposure to ASX-listed securities with no risk of margin calls. Ordinary dividends or distributions paid on the underlying security are used to reduce the loan amount.
Westpac SFIs are no longer available to primary market applicants (Cash Applicants, Securityholder Applicants or Rollover Applicants).
If you have any queries regarding your investment in this product please speak to your financial adviser or alternatively call Investment Sales on 1800 990 107 or email firstname.lastname@example.org.
- Listed on the ASX
- The second instalment (referred to as the Completion Payment or Loan Amount) is the loan component payable if you want to take full legal ownership of the underlying security
- All or part of the interest may be tax deductible
- If the price of the underlying security falls below the Loan Amount, you can walk away at expiry with no additional future payment required
- After paying the first instalment, investors receive many of the benefits of direct security ownership such as exposure to potential capital growth, dividends or distributions and franking credits (if eligible), for a lower capital outlay upfront (compared to buying the security outright)
- Any dividends or distributions received in relation to the underlying security are automatically used to reduce the Loan Amount whilst the annual interest payment is automatically capitalised to the Loan Amount
- Obtain a potentially tax efficient investment – depending on your circumstances and subject to the capital protected borrowing rules, the interest payments may be tax deductible and excess franking credits may be used to offset tax payable. Please refer to the detailed tax section in the PDS
- No separate loan application or credit checks
- No margin calls
- Available to SMSFs.
Risks associated with Westpac Self-Funding Instalments include:
- Gearing can magnify losses as well as gains. If the price of the underlying security falls, the price of the Westpac SFI may fall at a greater rate and investors may risk losing some or all of their capital investment
- The gearing level may change materially as the price of the underlying security and the loan amount change throughout the term. If the price of the underlying security falls, the price of the Westpac SFI will generally fall
- Any rise in interest rates may increase the amount added to the Loan Amount as interest
- The interest capitalised to the loan may be higher than the dividends received from the underlying securities, causing the loan amount to increase
- If a TFN, ABN or proof of exemption is not provided, holders may be required to pay an additional amount for tax in respect of any special dividends that are not fully franked
- The Completion Date for a Westpac SFI may be brought forward where an ‘Extraordinary Event’ occurs (for example, the underlying securities being subject to a buy-back offer, a takeover bid, a scheme of arrangement or a demerger)
- Tax legislation may alter and affect the tax treatment or obligations of instalment holders
- Exposure to Westpac if it is unable to perform its obligations.
You should also consider the taxation consequences. Investors should seek independent professional tax advice on any taxation matters.
Things you should know
Any reference to taxation matters is a general statement only and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and proposed announced tax amendments. The individual situation of investors may differ and investors should seek independent professional tax advice on any taxation matters.
Westpac Banking Corporation ABN 33 007 457 141, AFSL 233714 (Westpac) is the issuer of the Westpac Self-Funding Instalments Product Disclosure Statement dated 1 July 2013 and any supplementary or replacement product disclosure statements issued from time to time ('PDS'). The PDS is no longer current and is available for historical purposes only.
This information does not take into account your personal objectives, financial situation or needs so you should consider its appropriateness having regard to these factors before acting on it.