What is the Assignment of Bond?
An assignment is a process whereby one person, the assignor, transfers assets to another person, the assignee, who becomes the new owner of the assets. This mechanism allows the tax point of an investment bond to be deflected away from the original owner to a new owner. Any person seeking a bond assignment shall file a motion with the court to which the criminal case is assigned and only upon presentment of an order from said court shall the bond be released to that person.
Need For Assignment of Bond?
The benefit of being able to assign, or change policy ownership, is that the transaction is not a chargeable event for income tax, provided that it is a genuine gift and has not been assigned for money or money’s worth.
Provided the assignment is a gift, an assignment is highly efficient from a tax perspective. If you choose to assign a bond or segments of a bond to another taxpayer subject to a lower tax bracket, you can effectively reduce the income tax payable on encashment.
FAQ For Assignment of Bond
Q1. Is an assignment of a bond a pet?
Ans – Gifts, including the assignments of an existing bond, into a bare trust will be a PET. Any chargeable gains are assessed on the beneficiary.
Q2. Can you assign a bond to anyone?
Ans – Much depends on the reason for the assignment, but there may be advantages, not least if you transfer ownership to a taxpayer in a lower tax bracket. Owners can assign a bond to an adult child without capital gains tax liability.
Q3. Is an assignment a gift?
Ans – An assignment is a gift by the assignor making the assignment to the assignee receiving the assigned interest. Assignments create tax issues for both the assignor and assignee.
Q4. Is a bond an ownership?
Ans – bonds issued by companies give you no ownership rights.
ASSIGNMENT OF A BOND
BE IT KNOWN TO ALL MEN that I, ……………………………….……………. the person named as the Obligor in the Bond, dated _____________________, executed in my favor by ………………………..…………………… of, etc. in the sum of Rs _________________ hereby transfer and assign absolutely all my rights, title and interest in the said Bond to……………………………. of, etc. he having paid me the sum of _________ which I accept as full consideration of the said Bond. And be it further known that the said……………., his heirs, successors, and assigns shall hereafter be entitled to recover and enforce payment of the sum accruing due (principal and interest) on the said Bond
SIGNED, dated, and delivered at _________ this the _________ day of _________, 20 _________.
Witness:
1.
…………………………………………..
