Investment bonds are designed to provide tax effective investment solutions to your real life challenges;
How do I build wealth tax effectively?
How can I give my children financial security?
How can I pass wealth to loved ones without burdening them with additional tax?
- Tax effective
- Flexible access at any time
- A range of investment options
- Alternative to superannuation
- Invest in a child’s future
- Pass on your wealth
Estate Planning
Insurance bonds may provide estate planning opportunities for some investors. When an investment bond is set up, you’ll need to nominate a policy owner, a life or lives to be insured and beneficiaries. The policy owner may be the same as the life insured.
Most investment bonds also offer a child advancement policy where ownership of the policy is able to be transferred to a child or grandchild when they reach a nominated age. This can be a tax effective way to save for a child or grandchild’s future.
Rules for Investment Bonds
10 year rule
Investment bonds are tax paid investments. This means when earnings on the investment are received by the insurance company, they are taxed at the corporate tax rate (currently 30%) before being reinvested in the bond. This can make insurance bonds a tax effective long term investment for those with a marginal tax rate higher than 30%.
125% Rule
Investors in investment bonds can make additional contributions each year. As long as the contribution does not exceed 125% of the previous year’s contribution, it will be considered part of the initial investment. This means each additional contribution does not need to be invested for the full 10 years to receive the full tax benefits.