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 tax at a rate of up to 30%. 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.

A simple tax effective solution

No personal tax payable when investment held for 10-year period if no withdrawals made

No personal tax payable on bond earnings

Investment Bond Superannuation
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 paid 21 – 30% 10 – 15%
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 Bond & Superannuation comparison

Liquidity
Investment Bond Access at any point
Superannuation Preservation age
Gearing against
Investment Bond Investment loans deductible
Superannuation Prohibited
Legislation
Investment Bond Simple and stable
Superannuation Complex and unstable
Death tax
Investment Bond Tax free on death
Superannuation No more anti-detriment
Unlimited contributions
Investment Bond No limits on investment amount
Superannuation Capped
Ownership transfer
Investment Bond To any legal entity
Superannuation Restrictions apply
Tax penalty
Investment Bond Fully flexible
Superannuation When rules are broken
Tax paid
Investment Bond 21 – 30%
Superannuation 10 – 15%
Tax-free access & distributions
Investment Bond At 10 years and death
Superannuation Preservation age & death
No tax reporting
Investment Bond Unless withdrawn pre-10 years
Superannuation Unless rules are breached
Switch without CGT
Investment Bond Internal to product structure
Superannuation Internal to product structure

Why investment bonds

Investment earnings are taxed at a maximum rate of 30%

Minimum investment amount of $1,000

Can invest a single amount or can choose to add to your initial investment each year

37 investment options to choose from and the ability to switch 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

Start Investing Today

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