47Calculation of the allocation rate

47 Calculation of the allocation rate

Application of steps (1) To work out the allocation rate for a quarter, apply the following steps. Adjusted total balances (2) Calculate the adjusted total balances for the quarter by: (a) working out, for each day in the quarter, the total balances of all the accounts; and (b) adding up those totals; and (c) dividing the result by the number of days in the quarter. For the purposes of this calculation, if an account balance actually exceeds $1,200, the account balance is taken to be $1,200. Provisional rate (3) Calculate the provisional rate for the quarter as a percentage (to 4 decimal places) using the formula: Start formula start fraction Net interest amount over Adjusted total balances end fraction times 100 end formula where:

Net interest amount means the net interest amount for the quarter;

Adjusted total balances means the adjusted total balances for the quarter.

Note: Net interest amount is defined by section 39.

Total balances (4) Calculate the total balances for the quarter by: (a) working out, for each day in the quarter, the total balances of all the accounts; and (b) adding up those totals; and (c) dividing the result by the number of days in the quarter. Capped rate (5) Calculate the capped rate as a percentage (to 4 decimal places) using the formula: Start formula start fraction Gross interest amount over Total balances end fraction times 100 end formula where:

Gross interest amount means the gross interest amount for the quarter;

Total balances means the total balances for the quarter.

Note: Gross interest amount is defined by section 38.

Allocation rate—comparison between provisional rate and capped rate (6) Compare the provisional rate with the capped rate: (a) if the provisional rate is less than or equal to the capped rate—the allocation rate equals the provisional rate; or (b) if the provisional rate exceeds the capped rate—the allocation rate equals the capped rate.