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CONGRESS OF THE
COMMONWEALTH OF REDMONT
A BILL TO
Enforce the Bank Profit Tax
The people of the Commonwealth of Redmont, through their elected Representatives in the Congress and the force of law ordained to that Congress by the people through the constitution, do hereby enact the following provisions into law:
1. Short Title and Enactment
(1) This Act may be cited as the 'Banking Income Tax Act’
(2) This Act shall be enacted immediately upon its signage.
(3) This Act has been authored by jJoshuaTheGreat and Representative Incarnation__.
(4) This Act has been co-sponsored by Speaker TrueDarklander.
(5) This Act amends the following acts:
(a) Taxation Act
(b) Criminal Code Act
2. Reasons and Intent
(1) The purpose of this Act is to ensure that financial institutions are taxed on realized economic income, calculated in a manner that is clear, enforceable, and resistant to avoidance.
(2) This Act is intended to:
- Establish a clear and comprehensive framework for the computation of income, including the determination of revenue and deductible expenses;
- Prevent the reduction of taxable income through artificial arrangements, including the mischaracterization of shareholder distributions, compensation, or capital transactions;
- Restrict the excessive use of loss carryforwards and other mechanisms that distort the measurement of income between taxation periods; and
- Strengthen the authority of the Department of Commerce to enforce compliance and ensure the integrity of the taxation system.
(4) This Act is intended to create a strict but fair method of taxing profits of deposit-taking financial institutions effectively.
3. Definitions
(1) For the purposes of this Act, the following definitions shall apply:
(a) Equity/Shareholder capital. Means the residual interest in the assets of a financial institution after deducting its liabilities, and includes contributed capital and retained earnings, but only to the extent that such interest:
(i) Exposes the holder to a genuine and unrestricted risk of loss of principal;
(ii) Provides returns that are variable and materially dependent on the financial performance of the institution;
(iii) Is not redeemable, retractable, repurchaseable, callable, or otherwise returnable, whether directly or indirectly, at a fixed, guaranteed, or predetermined amount other than upon dissolution or bankruptcy;
(iv) Does not provide any contractual, implied, or practical entitlement to liquidity, withdrawal, or repayment on demand or within a determinable period;
(v)Is fully subordinated, in all circumstances including insolvency or liquidation, to the claims of depositors and all other creditors; and
(vi)Does not contain any feature, arrangement, side agreement, expectation, or understanding that has the purpose of effect of preserving capital, acting as a store of value, or otherwise replicating the effect of a deposit.
An instrument shall not be classified as equity unless all conditions in this subsection are satisfied
(b) Deposit. Means any liability, obligation, instrument, or arrangement under which a financial institution receives funds or value and is obligated, whether legally, contractually, or in practice, to repay an amount of money or equivalent value to a customer, counterparty, or holder, either on demand or at a determinable or agreed future time. A liability or instrument shall be deemed to be a deposit where it exhibits the following characteristics:
(i) The principal amount is fixed, determinable, or represented to be stable, and is repayable at or near par on demand or within a determinable period;
(ii) Funds are withdrawable, redeemable, transferable, or otherwise accessible on demand or with limited or defined notice;
(iii) The holder is not exposed to a meaningful or material risk of loss of principal under normal or reasonably foreseeable conditions;
(iv) Returns are fixed, guaranteed, administratively determined, and not materially dependent on the financial performance of the institution;
(v)The instrument is marketed, represented, or functions as a store of value, cash equivalent, cash management vehicle, or a means of payment;
(vi) There exists any explicit or implicit commitment, expectation, or practice that principal will be preserved and liquidity will be provided.
In determining whether an instrument constitutes a deposit, regard shall be had to the legal rights and obligations of the parties, the reasonable expectations of the holder, the manner in which the instrument is marketed or used, explicit and implicit assurances of principal protection, and the overall economic effect of the arrangement.
(c) Capital asset. Means any property, whether tangible or intangible, that:
(i) Is acquired, developed, or held for use on a continuing basis in the operation of the business; and
(ii) Is not held primarily for resale, disposition, or trading in the ordinary course of business.
(d) Capital expenditure/Capital improvement. Means any expenditure that:
(i) Results in the acquisition, creation, or enhancement of a capital asset;
(ii) Extends the useful life, increases the capacity, improves the efficiency, or enhances the value of a capital asset; or
(iii) Provides a benefit that extends beyond the taxation period in which the expenditure is incurred.
(e) Control. means the ability, whether direct or indirect, and whether exercised or not, to determine, influence, or direct the strategic, financial, or operational decisions of an entity, including through:
(i) Ownership of voting interests;
(ii) Contractual rights; or
(iii) Economic dependence
(f) Fair Market Value means the highest price, expressed in money or money’s worth, that would be agreed upon in an open and unrestricted market between informed, prudent, and willing parties dealing at arm’s length and under no compulsion to act.
4. Interpretation(1) For the purposes of this Act:
(a) The economic substance and practical effect of a transaction, instrument, or arrangement shall prevail over its legal form or characterization;
(b) A transaction includes a series of transactions, arrangements, or steps, whether or not formally documented;
(c) Rights, obligations, or expectations may be express or implied, and may arise from conduct, practice, or understanding;
(d) Any avoidance, artificial, or contrived arrangement shall be interpreted in a manner that prevents the reduction, deferral, or elimination of tax contrary to the purpose of this Act; and
(e) Where a provision can reasonably be interpreted in more than one way, the interpretation that best achieves the purpose of taxing realized economic income and preventing avoidance shall be preferred.
PART II — IMPOSITION AND RATES OF TAX
5. Tax Imposed
(1) A Financial Institution Tax is imposed on every financial institution for each taxation period on its taxable income, as computed under Part III of this Act.
(2) A Financial Institution Depositor Insurance Tax is imposed on every deposit-taking financial institution for each taxation period on its taxable income, as computed under Part III of this Act.
6. Rates of Tax
(1) The tax imposed under Section 5 shall be:
(a) Financial Institution Tax at a rate of 15%; and
(b) Financial Institution Depositor Insurance Tax at a rate of 10%.
(2) The rates in subsection (1) apply to the same taxable income.
7. Taxable Income
(1) “Taxable income” means income computed in accordance with Part III.
(2) Taxable income is determined separately for each taxation period.
8. Taxation Period
(1) A taxation period shall mean a calendar month.
PART III — Computation of Income
9. Income for Accounting Purposes
(1) The income for accounting purposes of a financial institution for a taxation period is the net increase in its equity arising from:
(a) All increases in assets, and
(b) All decreases in liabilities, other than:
(c) Contributions of capital by a shareholder.
10. Computed Taxable Income
(1) Taxable income for a taxation period is the accounting income determined under section 9, as adjusted in accordance with this Part.
11. Excluded Amounts
(1) In computing taxable income, any unrealized gains, or any amount otherwise included that is not realized, shall be excluded.
12. Deductions
(1) In computing taxable income, a financial institution may deduct only those expenses that:
(a) Are incurred for the sole purpose of earning income; and
(b) Are reasonable in the circumstances and amounts.
(2) Without limiting subsection (1), the following are deductible:(a) Interest expenses;
(b) Ordinary operating and administrative expenses;
(c) Employee compensation up to R$ 25,000 per employee;
(d) Regulatory and compliance costs;
(e) Credit losses, subject to subsection (3).
(3) Credit losses are deductible only to the extent that they are realized in the taxation period.
13. Non-Permitted Deductions(1) No deduction shall be made in respect of:
(a) A dividend or other distribution to a shareholder;
(b) A share buyback, redemption, or other equity repurchase;
(c) Any amount paid or payable to a related party;
(d) Any expense that provides a direct or indirect benefit to a shareholder or related party, including
(i) Housing or accommodations;
(ii) Vehicles or transportation assets;
(iii) Luxury goods or services;
(iv) Memberships; subscriptions; or private services;
(v) Entertainment not strictly required for business operations.
(e) Employee compensation in excess of R$ 25,000 per employee;
(f) Acquisitions or improvements of capital assets; or
(g) Any expense lacking economic substance or incurred primarily to reduce taxable income.
14. Deemed Dividends
(1) Any amount paid or payable as salary, wages, bonus, or other compensation to a shareholder shall be deemed to be a dividend, where that shareholder:
(a) Owns 10% or more of the equity of the financial institution; or
(b) Exercises a controlling interest in the financial institution,
(2) An amount deemed to be a dividend under subsection (1) is not deductible.
15. Related Parties(1) For the purposes of this Act, a “related party” includes:
(a) Any shareholder owning 10% or more of the equity of the financial institution or exercising a controlling interest in the financial institution; and
(b) Any entity that is controlled by, or at least 50% owned by, a person described in paragraph (a).
16. Loss Carryforwards
(1) A loss incurred in a taxation period may be carried forward and offset in future taxation periods not exceeding three months from the loss.
(2) A loss that is not applied within the period described in subsection (1) expires and shall not be deducted.
PART IV — PAYMENT, FILING, AND ENFORCEMENT
17. Filing of Return (1) Every financial institution shall, for each taxation period, file with the Department of Commerce a return in the form prescribed by the Department.
(2) A return under subsection (1) shall be filed not later than 30 days after the end of the taxation period.
(3) The return shall include financial statements prepared in accordance with generally accepted accounting standards, or, at the election of the taxpayer, under International Financial Reporting Standards, and such statements shall include:
(a) A balance sheet;
(b) An income statement;
(c) A cash flow statement;
(d) A statement of changes in equity; and
(e) A computation of income for tax purposes under Part III in a form prescribed by the Department of Commerce.
18. Tax Payable and Due Date(1) Tax payable for a taxation period is due not later than 10 days after the end of that taxation period.
(2) Where a financial institution has not filed a return under section 17 by the time its tax becomes payable, the amount due under subsection (1) shall be:
(a) The amount of tax payable for the immediately preceding taxation period; or
(b) A financial institution’s reasonable estimate of the tax payable for the current taxation period.
19. Estimated Payments and Underpayments(1) Where a financial institution pays an amount under paragraph 16(2)(b) and that amount is less than the tax payable for the taxation period, interest shall accrue on the deficiency from the day after the amount was due under subsection 16(1), until the deficiency is paid.
(2) Where a financial institution pays an amount under paragraph 16(2)(a) and that amount is less than the tax payable for the taxation period:
(a) No interest shall accrue before the filing of the return required under section 15;
(b) The unpaid balance becomes due immediately on filing; and
(c) Interest shall accrue on that unpaid balance from the day after the return is filed until it is paid.
(3) For greater certainty, nothing in this section relieves a financial institution from liability for the tax payable for the taxation period beyond 10 days after the taxation period.
20. Overpayments and Tax Refunds(1) Where the amount paid on account of tax for a taxation period exceeds the tax payable for that period, the excess is an overpayment.
(2) The Department of Commerce shall refund an overpayment not later than 30 days after receipt of the return for the taxation period.
21. Interest
(1) Interest payable under this Part accrues daily.
(2) The rate of interest for the purposes of this Part is one percent per day.
(3) Interest under this Part is payable as tax and may be assessed, collected, and enforced accordingly.
22. Late Filing
(1) A financial institution that fails to file a return as required by section 17 is liable to a penalty of R$ 2,500 per day.
(2) A financial institution that suffers a repeated failure to file a return as required by section 17 shall be liable to a penalty of R$ 5,000 per day.
23. Records and Burden of Proof(1) Every financial institution shall maintain complete and accurate books, records, and supporting documentation sufficient to establish:
(a) Its income for accounting purposes;
(b) Its taxable income;
(c) The nature and amount of each deduction claimed; and
(d) Its compliance with this Act.
(2) The burden of establishing the correctness of any return, entitlement to any deduction, and the accuracy of any amount reported rests on the financial institution.(3) No deduction, reduction, or adjustment shall be allowed unless the financial institution establishes, to the satisfaction of the Department of Commerce, that it is permitted under this Act.
(4) Where a financial institution fails to provide sufficient evidence of any amount, transaction, or expense, the Department of Commerce may:
(a) Disregard that amount in whole or in part; and
(b) Determine the tax consequences accordingly.
(5) Books and records shall be retained indefinitely.
24. Inspection and Audit(1) The Department of Commerce may, at any time and without prior notice, inspect, examine, or audit the books, records, and affairs of a financial institution.
(2) In the course of an audit, the Department of Commerce may require the financial institution to:
(a) Produce any books, records, or documents;
(b) Provide explanations, reconciliations, and supporting schedules;
(c) Identify the parties to any transaction;
(d) Demonstrate the commercial purpose of any transaction or expense; and
(e) Establish the source, destination, and nature of any payment, receipt, asset, or liability.
(3) A financial institution shall provide all assistance reasonably required by the Department of Commerce in the course of an audit.(4) Failure to comply with this section permits the Department of Commerce to draw adverse inferences against the taxpayer.
25. Determinations and Adjustments(1) Where the Department of Commerce is not satisfied with the accuracy or completeness of a return, it may determine the income and tax payable of a financial institution.
(2) In making a determination under subsection (1), the Department of Commerce may:
(a) Deny any deduction not established to be allowable;
(b) Include in income any amount not properly reported;
(c) Recharacterize any transaction in accordance with its economic substance;
(d) Substitute fair market value for any non-arm’s length transaction; and
(e) Disregard any artificial or tax avoidance arrangement.
(3) A determination under this section may be based on:(a) Available records;
(b) Reasonable assumptions; and
(c) Estimates made by the Department of Commerce.
26. Assessments and Reassessments(1) The Department of Commerce may assess or reassess tax, interest, and penalties payable for any taxation period.
(2) An assessment or reassessment is deemed to be valid notwithstanding any error, omission, or defect in a return.
(3) Where a financial institution has failed to maintain adequate records, the Department of Commerce may assess tax on any reasonable basis.
(4) An assessment is deemed to be correct unless the financial institution establishes otherwise.
(5) The Department of Commerce may reassess any return within 12 months of its filing, and may indefinitely reassess any return that was knowingly filed incorrectly.
27. Notice of Assessment(1) The Department of Commerce shall issue a notice of assessment or reassessment to the financial institution.
(2) The notice shall set out:
(a) The taxation period;
(b)The amount of tax, interest, and penalties assessed; and
(c) The basis of the assessment in reasonable detail.
28. Right of Appeal(1) A financial institution may appeal an assessment or reassessment by filing a notice of appeal with the Department of Commerce.
(2) A notice of appeal must be filed within 7 days of the issuance of the notice of assessment.
(3) The notice of appeal shall:
(a) Specify the ground or grounds of appeal; and
(b) Include all supporting records, documentation, and submissions relied upon.
(4) No ground of appeal may be raised unless it is set out in the notice of appeal.(5) An appeal may be made only on the grounds that:
(a) The assessment contains a factual error;
(b) The assessment misapplies this Act; or
(c) The assessment is unreasonable, having regard to the available evidence.
(6) The burden of proof in an appeal rests on the financial institution.
29. Review of Appeal(1) An appeal shall be reviewed by the Secretary of the Department of Commerce or by an officer designated by the Secretary for that purpose who was not directly involved in the original assessment, where practicable.
(2) The reviewing authority may:
(a) Confirm the assessment;
(b) Vary the assessment; or
(c) Vacate the assessment and issue a reassessment.
(3) The reviewing authority is not required to consider any evidence or submission not provided with the notice of appeal.(4) Where an appeal results in a change to an assessment, the Department of Commerce shall issue a reassessment.
30. Final Administrative Appeal(1) A financial institution may make one further appeal to a reassessment issued under section 29.
(2) Sections 28 and 29 apply, with any necessary modifications, to an appeal under subsection (1).
(3) Any decision under this section is final for the purposes of this Act.
31. Recourse to Courts(1) A financial institution that is dissatisfied with a final decision under section 30 may seek relief before the Federal Court.
(2) No appeal to a court may be validly made unless the procedures under this Part have been exhausted.
(3) An assessment or reassessment remains payable and continues to incur interest and penalties notwithstanding any appeal, unless otherwise ordered by the court.
PART V ー OFFENCES AND PENALTIES32. Application of Criminal Code
(1) For greater certainty, the offences created pursuant to this Part apply specifically to financial institutions and related parties, and supplement but do not limit the operation of any provision of the Criminal Code Act, including Section 14 of the Criminal Code Act.
33. Financial Institution Tax Evasion(1) Part VII of the Criminal Code Act is amended by adding the following section immediately after Section 24:
25 - Financial Institution Tax Evasion
Offence Type: Indictable
Penalty: Up to 1000 Penalty Units; Up to 60 minutes imprisonment
A financial institution commits an offence if the financial institution:
(a) Understates, omits, or misrepresents taxable income;
(b) Overstates, fabricates, or improperly claims deductions;
(c) Conceals, disguises, or mischaracterizes any transaction, arrangement, or instrument; or
(d) Enters into any arrangement or series of arrangements for the purpose or effect of avoiding tax payable under the Banking Income Tax Act,
in a repeated, systematic, or coordinated manner and the conduct involves deliberate concealment or falsification.34. Definition of Capital Asset
(1) Part VII of the Criminal Code Act is amended by adding the following section immediately after Section 25:
26 - False Statement in Tax MattersOffence Type: Indictable
Penalty: Up to 200 Penalty Units; Up to 20 minutes imprisonment.
A person commits an offence if the person knowingly and intentionally:
(a) Makes, participates in, or assents to the making of a false, incomplete, or misleading statement; or
(b)Omits material information.
In any return, record, or document required under the Banking Income Tax Act.
35. Obstruction of Tax Administration(1) Part VII of the Criminal Code Act is amended by adding the following section immediately after Section 26:
27 - Obstruction of Tax Administration
Offence Type: Indictable
Penalty: Up to 500 Penalty Units; Up to 30 minutes imprisonment.
A person commits an offence if the person:
(a) Obstructs, hinders, or interferes with an audit, inspection, or investigation under the Banking Income Tax Act;(b) Fails to comply with a lawful requirement of the Department of Commerce under the Banking Income Tax Act; or
(c) Provides false or misleading information during an audit.
36. Failure to Maintain Records
(1) Part VII of the Criminal Code Act is amended by adding the following section immediately after Section 27:
28 - Failure to Maintain Records
Offence Type: Indictable
Penalty: Up to 100 Penalty Units; Up to 10 minutes imprisonment.
A financial institution commits an offence if the financial institution:
(a) Fails to maintain records required under the Banking Income Tax Act; and
(b) That failure materially impedes the determination of tax liability.
37. Liability of Directors and Officers(1) Part VII of the Criminal Code Act is amended by adding the following section immediately after Section 28:
29 - Liability of Directors and Officers
Offence Type: Indictable
Penalty: Same as underlying offence.
A person commits an offence if:
(a) A financial institution commits an offence under Sections 25 to 28; and
(b) The person:
(i) Directed, authorized, or permitted the commission of the offence; or
(ii) Knew or ought reasonably to have known of the offence and failed to take reasonable steps to prevent it.
38. Failure to Maintain Records(1) A financial institution, or a director, officer, or employee of a financial institution, may make a voluntary disclosure to the Department of Commerce in respect of any act, omission, or deficiency that results in:
(a) An understatement of taxable income;
(b) An overstatement of deductions;
(c) A failure to report required information; or
(d) Any other non-compliance with this Act.
(2) A disclosure under subsection (1) shall be valid only where:(a) The disclosure is made voluntarily;
(b) The disclosure is made before the financial institution or person:
(i) Is notified of an audit, inspection, or investigation relating to the subject matter of the disclosure;
(ii) Receives a notice of assessment or reassessment relating to the subject matter of the disclosure; or
(iii) Is otherwise aware that the Department of Commerce has commenced or intends to commence enforcement action in respect of the matter;
(c) The disclosure is complete and accurate in all material respects; and
(d) The financial institution or person cooperates fully with the Department of Commerce in correcting the deficiency.
39. Relief Under Voluntary Disclosure(1) Where a disclosure meets the requirements of section 38:
(a) No prosecution shall be commenced under the Criminal Code Act in respect of the disclosed conduct;
(b) Any penalty otherwise payable under this Act may be reduced or waived, in whole or in part, at the discretion of the Department of Commerce; and
(c) The financial institution shall be permitted a reasonable period, as determined by the Department of Commerce, to:
(i) File amended returns;
(ii) Provide additional records or information; and
(iii) Pay any tax owing.
(2) Relief under subsection (1) shall not apply where:(a) The disclosure relates to conduct involving deliberate fraud, falsification of records, or intentional deception;
(b) The disclosure is incomplete, misleading, or materially inaccurate; or
(c) The disclosure is made after the conditions in section 38(2)(b) are no longer satisfied.
(3) Notwithstanding subsection (2), the Department of Commerce may grant partial relief where:
(a) The disclosure substantially assists in the detection, investigation, or resolution of non-compliance; and
(b) It is in the public interest to do so.
PART VI ー CONSEQUENTIAL AMENDMENTS AND TRANSITION40. Amendments of Prior Provisions
(1) Section 5 of the Taxation Act shall be repealed in its entirety:
5 - Financial Institutions Tax
(1) Deposit-taking financial institutions will be taxed on their monthly reported profit.
(a) This tax will be fined by the Department of Commerce.
(b) Taxation is due by the end of the second week of the following month.
(2) Financial Institution Taxation Rates:
| Taxation Type | Taxation Rate |
| Financial Institution Tax | 10% |
| Financial Institution Depositor Insurance Tax | 10% |
| Total | 20% of Profits |
(2) Section 7 of the Taxation Act shall be repealed in its entirety:
7 - Financial Records and Reporting
(1) Deposit-taking financial institutions must keep detailed accounts of their investment revenue and obligations to their depositors.
(a) Should deposit-taking financial institutions misrepresent their profits to the Department of Commerce, the entity will be liable for prosecution.
(b) Profit shall be calculated as revenue less operating costs for the reporting period, minus any losses carried forward from prior reporting periods.
(i) Loss Carry-forward: Any loss (negative profit) reported to the Department of Commerce in a previous monthly Financial Report may be carried forward to offset profits in subsequent periods up to the amount not yet offset in previous reporting periods.
(ii) Only losses that were reported in previously submitted Financial Reports may be carried forward. Losses not previously reported are not eligible for carry-forward.
(iii) The reporting period shall run from the date in the last report or, in the first report, the first day of trading.
(2) Deposit-taking financial institutions are required to report to the Department of Commerce by the end of the first week of the succeeding month:
FINANCIAL REPORT
(a) Income Statement
(b) Balance Sheet
(c) Management Discussion & Analysis (MD&A) – a narrative disclosure addressing:
(i) Any significant changes in the financial condition or operations of the institution since the prior reporting period.
(ii) A summary of the institution’s investment portfolio, including securities, loans, and other financial instruments held.
(iii) Information on any regulatory actions, legal proceedings, or other material events that may impact the institution’s financial stability.
(iv) The institution’s compliance status with relevant financial regulations and guidelines.
(3) All financial reports must be prepared and submitted by an licensed accountant with their name attached to the document.
(4) Failure to comply with reporting requirements will result in the financial institution surrendering its taxation exemption status until a report is submitted.
(3) Section 8(3)(c) of the Taxation Act is amended as follows:
8 - Powers of the Department of Commerce
(3) The Department of Commerce will have the following non-exhaustive powers in relation to regulating financial institution tax obligations:
(c) Enforcement of Taxation. The Department is empowered to enforce the taxation provisions outlined in Section 7. This involves assessing, collecting, and overseeing the proper payment of monthly taxes by deposit-taking financial institutions.
The Department is empowered to enforce the provisions outlined in the Banking Income Tax Act
41. Application of this Act
(1) The computation of income and taxation of financial institutions shall, from the coming into force of this Act, be governed exclusively by this Act.
(2) Any reference in the Taxation Act or any other enactment to:
(a.) The taxation of financial institutions; or
(b.) The computation of income of financial institutions, shall be read as a reference to this Act.
42. Transitional Rules(1) This Act applies to taxation periods commencing after its coming into force.
(2) Any taxation period that commenced before the coming into force of this Act shall continue to be governed by the Taxation Act as it is read immediately before that time.
(3) Any loss arising under the Taxation Act prior to the coming into force of this Act shall be carried forward and applied to future taxation periods not exceeding 3 months from the coming into force of this Act.
(4) Any obligation to file returns, pay tax, or comply with enforcement actions arising before the coming into force of this Act remains valid and enforceable.
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i) Exposes the holder to a genuine and unrestricted risk of loss of principal;(ii) Provides returns that are variable and materially dependent on the financial performance of the institution;(iii) Is not redeemable, retractable, repurchaseable, callable, or otherwise returnable, whether directly or indirectly, at a fixed, guaranteed, or predetermined amount other than upon dissolution or bankruptcy;(iv) Does not provide any contractual, implied, or practical entitlement to liquidity, withdrawal, or repayment on demand or within a determinable period;(v)Is fully subordinated, in all circumstances including insolvency or liquidation, to the claims of depositors and all other creditors; and(vi)Does not contain any feature, arrangement, side agreement, expectation, or understanding that has the purpose of effect of preserving capital, acting as a store of value, or otherwise replicating the effect of a deposit.An instrument shall not be classified as equity unless all conditions in this subsection are satisfied(b) “Deposit” means any liability, obligation, instrument, or arrangement under which a financial institution receives funds or value and is obligated, whether legally, contractually, or in practice, to repay an amount of money or equivalent value to a customer, counterparty, or holder, either on demand or at a determinable or agreed future time. A liability or instrument shall be deemed to be a deposit where it exhibits the following characteristics
Much appreciated. Amended the changes where applicable as suggested. Let me know if I missed anything.