What are investment bonds?
Our 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?’ and ‘how can I pass on my wealth to loved ones without burdening them with additional tax?’
The 10-year advantage of investment bonds
Investment bonds are tax paid investments, meaning that when earnings are received we pay an effective tax rate of up to 30% of the earnings. If your marginal tax rate is higher than 30%, this makes investment bonds a great tax-effective long term investment.
If you invest in the bond for at least 10 years, your growth on the entire investment, including additional contributions, will be tax paid, and withdrawals after the 10th anniversary will be free of any personal tax in your hands - subject to the rules around the 125% opportunity. Also, you will not attract any capital gains tax on withdrawal or when switching between investment options.
Your investment bond is designed to be held for at least 10 years to be most tax effective and offers the continued flexibility to make additional contributions over the life of the investment bond.
While there is no limit on how much you can contribute in your first year, each year following, you can continue to add up to 125% of the previous year’s contributions, without extending your 10 year term for tax purposes. This means, the contributions you make along the way also receive full tax benefits.
It’s your money so it’s important to know you can access it at any time.
However, it’s worth remembering that if you do withdraw part or all of your investment before the 10 years is up, some of the earnings may be taxable, depending on when the withdrawal is made (although you will get a tax offset back).
If you don’t make a contribution to your investment bond for one year, any new contribution in the following years resets the 10 year period.
No personal tax payable when investment held for 10-year period if no withdrawals made
No personal tax payable on bond earnings
|Liquidity||Access at any point||Preservation age|
|Gearing against||Investment loans deductible||Prohibited|
|Legislation||Simple and stable||Complex and unstable|
|Death tax||Tax free on death||No more anti-detriment|
|Unlimited contributions||No limits on investment amount||Capped|
|Ownership transfer||To any legal entity||Restrictions apply|
|Tax penalty||Fully flexible||When rules are broken|
|Tax-free access & distributions||At 10 years and death||Preservation age & death|
|No tax reporting||Unless withdrawn pre-10 years||Unless rules are breached|
|Switch without CGT||Internal to product structure||Internal to product structure|
Investment earnings are taxed at an effective annual rate of up to 30%
Minimum investment amount of $1,000
Invest a single amount or choose to add to your initial investment each year
A large range of investment options to choose from with the ability to switch between options without personal tax consequences
Complete flexibility to access your investment at any time
Automatic portfolio rebalancing
LifeBuilder’s Future Event feature - control how and when your funds are passed on
Regular Savings Plan with the ability to automatically increase annually
Minimal to no tax reporting provided there are no withdrawals within the 10 year period
Transfer your investment without restarting the 10-year period, preserving its tax paid status