Breaking the Buck refers to a decline in the normally constant $1 net asset value (NAV) of a money market fund. This can occur if the fund suffers severe losses or if investment income falls below operating expenses.
A capital gain dividend is any distribution that is designated as such by a regulated investment company in a written notice mailed to its shareholders not later than 60 days after the close of its taxable year. It is treated as a capital gain by the shareholders.
The term 'clipping coupons' originally referred to collecting interest payments from coupon bonds, but it has since evolved to describe saving money by using discount coupons from newspapers or magazines.
A defined-benefit pension plan promises to pay a specified amount to each person who retires after a set number of years of service. These plans pay no taxes on their investment income.
Foreign investment refers to the investments made by citizens or governments of one country into the industries of another country, including investments within a country by foreigners. The income tax treatment of foreign investment income is often governed by tax treaties between the country of the investment owner and the country where the investment is located.
Gross corporation tax is the total amount of corporation tax payable on the profits chargeable to corporation tax for an accounting period, calculated before deduction of any income tax suffered on investment income.
The gross dividend refers to the total amount a company distributes to its shareholders before any withholding taxes or other deductions.
Investment income refers to the earnings generated from various types of investments, including dividends, interest, and gains made from the sale of investment properties.
A mutual fund is a type of regulated investment company that pools money from shareholders to invest in a diversified portfolio of stocks, bonds, and other securities.
Net Investment Income refers to the excess of investment income over investment expenses. Individuals are allowed to deduct investment interest expenses for tax purposes to the extent of their net investment income.
A Personal Holding Company is a corporation that derives a substantial portion of its income from passive sources and is closely held by a small number of individuals to avoid personal taxes on investment and personal service income.
Profits chargeable to corporation tax (PCTCT) represent the total taxable profits of a corporation on which corporation tax is calculated. This includes profits from trading, property, investment income, overseas income, and chargeable gains, after deducting any allowable charges.
A realized gain represents the profit earned from the sale of an asset, calculated as the difference between the asset's selling price and its original purchase price. This gain, although realized, is not always immediately subject to taxation.
The interest rate at which an investor can reinvest earnings from an existing investment.
Retirement income refers to the various sources of funds that a retired individual receives, which can include Social Security benefits, pensions, annuities, and investment income. This income is critical for maintaining an individual's lifestyle once they are no longer earning a regular paycheck.
Running yield, often referred to simply as yield, is a financial metric used to measure the annual income generated by an investment relative to its current market price.
The simple rate of return measures the profitability of an investment by dividing the total earnings (income and capital gains) by the original amount invested. It is a straightforward way to assess the financial performance of an investment without considering compounding effects.
Any investment income received by a company that did not qualify as franked investment income, mainly impacting the tax treatment of dividends.
