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Structured finance describes any "non-standard" way of raising money. These tailor-made securities go beyond "standard" securities like conventional loans, debentures, debt, and equity. The reason to structure a more advanced security may be that conventional securities may be unattractive, unavailable or too expensive. For other uses, see Money (disambiguation). ...
A loan is a type of debt. ...
A debenture in finance, is a long term debt instrument used by governments and large companies to obtain funds. ...
Debt is that which is owed. ...
This article is about concept of equity in Anglo-American jurisprudence. ...
Structured finance often refers to using loopholes in a country's tax law to obtain some unintended tax benefit which is used to provide a cash flow benefit to a borrower. Generally these structures result in the following:
(i) create tax deductions where there has been no economic expense; or (ii) convert taxable income into tax exempt income; or (iii) convert non-tax deductible expenses into tax deductible expenses.
The structured finance industry has flourished as tax laws have become more and more complex, and as cash flow modelling techniques have become more sophisticated. The globalisation of finance has also pushed growth in this area.
Recently, governments have begun efforts to reduce the loss of their tax revenues caused by use of these unintended tax consequences in structured financing transactions. Countries such as the United States of America, the United Kingdom and South Africa, amongst others, have introduced a variety of measures to combat aggressive tax avoidance schemes. These measures include compulsory and timely disclosure of schemes to the tax authorities, as well as statements by politicians making it clear that the use of "unacceptable" (albeit legal) tax avoidance schemes will be attacked.
Examples
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