Glossary
Face value
The value of a security set by the company issuing it that will be the amount payable on maturity. This may differ from the market value, that is, the amount it trades for.
failure to take reasonable care
ATO term - Occurs when a taxpayer does not do what a reasonable person in the same circumstances would have done. Circumstances include age, health, knowledge and education.
Fair value
Current value of the underlying shares or index, plus an amount referred to as the 'cost of carry'. An estimate of the price an option should sell at in an efficient market.
Fee for service
An amount paid to a service provider such as an accountant, adviser or lawyer, for specific work, completed at your request, for your benefit. Different to a commission
FEG
The Fair Entitlements Guarantee - an Australian Government payment scheme administered by the Attorney-General's Department to assist employees who have lost their jobs as a result of their employer's liquidation or bankruptcy and are owed employee entitlements. The FEG operates in relation to claims for assistance for certain unpaid entitlements for all employer liquidations and bankruptcies that occur on or after 5 December 2012
FHSA
First Home Saver Account - a tax effective way for eligible Australians to save for a first home through a combination of government contributions and low taxes.
Fidelity fund
Fund available in limited circumstances for clients who have suffered a loss because of a defalcation or fraudulent misuse of money or other property by the broker. Funds are not available to compensate for trading losses.
Final payment (loan amount)
Usually the second payment amount outstanding for an Instalment, which must be paid to take delivery of the underlying asset. May also be referred to as the exercise price.
Finance broker
A go-between who negotiates with banks and other credit providers to arrange loans on behalf of others.
Financial adviser
A person or authorised representative of an organisation licensed by ASIC to provide advice on some or all of these areas: investing, superannuation, retirement planning, estate planning, risk management, insurance and taxation. May also call themselves a financial planner.
Financial Claims Scheme (FCS)
An Australian Government-backed safety net that protects deposits of up to $250,000 per account holder per authorised deposit-taking institution (ADI) (bank, building society or credit union) in the unlikely event of the ADI failing. It also covers most general insurance policies for claims up to $5,000, with claims above $5,000 eligible if they fulfil certain criteria.
Financial counsellor
A person who gives free, confidential and independent assistance to people with financial problems. Financial counselling services are usually provided by community or welfare organisations.
Financial Institutions Duty (FID)
Financial Institutions Duty.
Financial plan
A plan, usually created with help from a financial planner or adviser, that defines your financial goals and sets out investment strategies to reach your stated goals, with reference to your personal circumstances.
Financial planner
A person or authorised representative of an organisation licensed by ASIC to provide advice on some or all of these areas: investing, superannuation, retirement planning, estate planning, risk management, insurance and taxation. May also call themselves a financial adviser.
Financial product
A facility that helps you to save, invest, get insurance or borrow money.
Financial service
A service dealing with the management of money. It includes providing advice on financial products, dealing in financial products, making a market for financial products, operating a registered scheme or providing a custodial or depository service.
Financial Services Guide (FSG)
A guide that contains information about the entity providing you with financial advice. It should explain the financial service offered, the fees charged and how the person or company providing the service will deal with complaints.
First Home Owners Grant
A grant provided by state governments to first home buyers, to offset the effect of the GST on buying or building a home. For more information see the Government's First Home Owner's Grant website.
First Home Saver Account
A Federal Government initiative that was set up to help people save for their first home. These accounts were abolished from 1 July 2015 and existing first home saver accounts have now been converted to ordinary savings accounts.
First payment
Initial payment (capital plus interest and fees) to purchase the shares via an Instalment Warrant.
Fixed interest
Security for which the return when held to maturity is fixed. Fixed interest securities normally receive periodic interest payments and repayment of principal at maturity.
Fixed interest investment
A type of investment that offers a set rate of interest for a specified amount of time, with the principal repaid at maturity. Covers a broad range of investments, with varying degrees of risk, such as term deposits, government bonds, corporate bonds, capital notes, debentures and income securities.
Fixed interest rate
Interest is paid at a fixed rate over the term of a loan or investment. Opposite of variable interest rate
Fixed rate home loan
Allows you to lock in an interest rate on your loan, typically for 1 to 5 years. Protects against interest rate rises but also means you won't benefit from falling interest rates.
Float
Initial capital raising by public subscription to an offering of securities.
Floating rate note
A type of fixed income investment where the principal is repaid at maturity but the interest rate is linked to a market interest rate such as the bank bill swap rate. As the benchmark rate changes (usually adjusted quarterly) so does the investor's income.
Foreign transaction fee
A fee that may be charged by credit card providers for purchases, cash advances or transactions that are made with overseas-based merchants or financial institutions, or with Australian-based merchants who process payments overseas.
Forward agreement
Contract to exchange a particular good or financial instrument at a set price on a future date.
Franked dividend
Dividend paid by a company out of profits on which the company has already paid tax. The investor is entitled to an imputation credit, or reduction in the amount of income tax that must be paid, up to the amount of tax already paid by the company.
Franking credit
Your share of the tax a company has already paid on the profits you received as a dividend or distribution.
Franking rate
Tax rate at which the dividend is franked.
fraud
Wrongful or criminal deception intended to result in financial or personal gain. In a tax context this includes claiming tax refunds and money laundering, using false or stolen identities, claiming GST credits for goods or services that GST was not paid on, and claiming deductions for expenses not incurred or legally deductible.
FSG
A guide that contains information about the entity providing you with financial advice. It should explain the financial service offered, the fees charged and how the person or company providing the service will deal with complaints.
fuel excise
A tax on fuel and petroleum products (excisable goods) produced or manufactured in Australia. Imported fuel and petroleum products are subject to customs duty at a rate equivalent to excise. This is to ensure they are treated consistently with goods manufactured in Australia. These imported goods are referred to as excise equivalent goods (EEGs).
Fully covered warrant
Warrant series for which the warrant issuer has placed the underlying shares in a trust or cover arrangement.
Fully franked dividend
A share dividend on which the company has already paid tax. This means shareholders are entitled to a credit for the amount of tax the company has already paid. This credit is known as an imputation credit or franking credit.
Fund choice
Allows employees to choose the super fund their employer pays their super contributions into.
Fund manager
Individual or organisation responsible for investing funds on behalf of a financial institution. See also investment manager
Fundamental analysis
Method of analysis using ratios and percentages calculated from financial data of a company to assess the company's quantitative and qualitative aspects.
Funeral bond
A capital guaranteed managed fund to accumulate benefits to help meet the future cost of funeral expenses. Funeral bonds have tax and Centrelink advantages.
Futures
Legally binding contracts to buy or sell a particular asset, currency or other index, for a specified price on a specified future date.
Futures contract
An agreement to buy or sell an asset or cash equivalent at a date in the future at a price agreed today. The contracts are traded on a futures market. The contract is then novated with a clearing house interposed between buyer and seller.
