The Government sets a dividend payout ratio after considering assets available to and estimated profitability of an agency. The dividend may be a percentage rate of return on net assets, a fixed sum or a percentage of net profits. A capital injection will take the form of an equity injection or an interest bearing loan. Equity injections increase the Commonwealth's interest in an agency. This may result in higher CUC payments or dividends.
Interest bearing loans have no effect on an agency's shareholder equity.
The Government is concerned with the maintenance of the Commonwealth's equity in all agencies. Operating losses directly erode shareholder value by reducing the accumulated results component of equity. Agencies who anticipate a budgeted loss subsequent to the budget process and prior to Additional Estimates are required to gain approval to budget for a loss. An operating loss incurred by an agency will reduce the net equity at the end of a year and therefore a reduced CUC will result. Where dividends are calculated as a proportion of net profit, no dividend will be payable if a net loss is incurred.