Investment bonds an alternative to super
Financial advisers looking for tax-effective savings options other than superannuation in light of the Federal Budget changes can explore investment bonds, Lifeplan said.
The funds management firm suggested that investment bonds were a particularly good tax-advantaged alternative to superannuation, with earnings tax paid at a maximum of 30 per cent.
Head of Lifeplan, Matt Walsh said changes to the super system meant many investors would have to think of alternatives sooner than they thought but said they should not panic.
"A well-trodden path for higher net worth and higher income investors in the past who had capped out their superannuation limits is investment bonds, but these aren't the exclusive domain of the very wealthy — they are easily accessible to everyone," Walsh said.
Investment bonds also did not have restrictions on withdrawals before preservation age, and withdrawals would be non-assessable for income tax purposes and there was no preservation age or condition of release once the policy was 10 years old.
"In effect, it creates a true transition to retirement strategy outside of superannuation. In this situation an investment bond can be drawn on with a ‘deductible amount' plus a tax offset in accordance with the individual's marginal tax rate," Walsh said.
AUTHOR
Malavika Santhebennur
Recommended for you
With reporting season concluded for another financial year, Money Management rounds up the result of Australia’s listed advice licensees and where they are looking to in the year ahead.
Having acquired Evidentia with the goal of building out its managed accounts division, GDG has reported a 49 per cent rise in managed account funds under management in FY25.
The inquiry into the collapse of Dixon Advisory and broader wealth management companies by the Senate economics references committee will not be re-adopted.
After seven weeks of strong growth, Wealth Data analysis shows financial adviser gains are now tapering off and returning to a regular pace.
