Simple, Flexible, Certain
Life Events Bond
Increasingly Financial Advisers are turning to Investment Bonds, like KeyInvest's Life Events Bond, as a tax effective wealth accumulation solution that also provides lump sum or regular withdrawals when you need the money. The Life Events Bond can be used for many different reasons.
- Tax effective wealth accumulation
- As an alternative retirement savings product to superannuation
- Estate Planning: Providing a legacy for your loved ones
Financial Advisers may recommend the Life Events Bond to execute more complex strategies.
What is an Investment Bond?
An Investment Bond is a tax paid investment. This means that while you remain invested in the Bond you do not have to pay any personal tax, rather the Bond issuer, KeyInvest, pays tax at the Corporate Tax rate, currently 30%. Importantly, you can access your money at any time. Withdrawals after the 10 year period will not attract any personal tax. If you withdraw during the 10 year period then any growth will be assessable income to you, however you receive a valuable 30% tax offset.
An Investment Bond like KeyInvest's Life Events Bond has unique Estate Planning features such as the ability to nominate Beneficiaries or access to the Child Advancement Option. For more information go to our Estate Planning and Wealth Transfer page.
Benefits of the KeyInvest Life Events Bond
- No tax to pay while you remain invested
- Tax paid withdrawals after the 10 year period
- Receive a valuable 30% tax offset, reducing tax payable, for withdrawals during the 10 year period
- No Capital Gains Tax when switching between investment options
- Ability to increase contributions by up to 125% per year and still withdraw funds after the 10 year period without personal tax
- Easy to use
- A set and forget investment set aside for a specific life event
- Earnings are not declared in a personal tax return while you remain invested for the 10 year period
- Reduces paperwork. There is no need to track things like Capital Gains Tax, dividend payments and imputation credits
- No preservation rules or work/test rules
- A choice of Investment Options
- Can be used for a range of needs
- Switch between Investment options at any time
- Access to your funds at any time
- Funds pass to nominated beneficiaries on death regardless of any instructions in your Will
- Change beneficiaries at any stage
- Allows transfer of the investment to a nominated child on a date you select. Note: must transfer to the child bewteen their 10th and 25th birthday
10 Year Period Rule
Withdrawals made after the 10 year period will be free from personal tax subject to the 125% rule below. The growth portion of any withdrawals made during the 10 year period will attract tax at your Marginal Tax Rate (MTR) but you receive a valuable 30% tax offset to reduce the tax you pay. For example, if you have a MTR of 34% including 2% Medicare Levy, the extra personal tax you pay will be 4% (34% less the 30% tax offset).
125% Contribution Rule
The above tax advantage can be maximised by contributing up to 125% of the contributions you made in the previous policy year and each additional contribution is backdated to the original contribution date for the purpose of the 10 year period. For example, if you contribute $10,000 in year one, you can contribute $12,500 in year two (10,000 x 125%), $15,625 in year 3 (12,500 x 125%) and so on. If you did this each year then in year 10 you could contribute $74,505 and wait less than one year for earnings to be withdrawn without any personal tax.
The vesting date is the date that the Life Events Bond ownership is transferred to the child you nominated under the Child Advancement Option.
Chid Advancement Option
An optional choice you can make to nominate a child (must be under 16 at the time of taking out the Life Events Bond) and transfer (vest) the policy to the child on a date you nominate (must be between their 10th and 25th birthday).
Speak to our friendly staff about our Retirement Villages and Investment Bonds today - KeyInvest is your best choice to secure your future.
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