Investors’ eyes opened to flexible, tax effective investment to boost super, support long term goals

1 July 2014

Increased investor demand for tax effective investments that provide an alternative to superannuation while still supporting longer term goals is a growing theme in the current investment environment. It’s a need that has been addressed by a new, tax effective insurance bond developed by Centuria Capital.

Centuria has worked alongside key dealer groups to develop an investment option that enables independent investment managers to manage underlying funds while retaining a tax effective structure and a host of other investor benefits.

It’s an approach that delivers the best of both worlds: control for dealer groups, enabling them to remain true to their investment themes and philosophies and, for advisers and investors, simplicity and confidence in investment, taxation and estate planning outcomes.

Only just released, the umbrella TaxAstute series includes separate ‘Funds’ specific to individual dealer groups or investment managers. Centuria maintains management of the overall vehicle, using its extensive expertise and track record in the insurance bonds space.

So, for example, growth and earnings in the product are taxed at a maximum of 30%, which is paid by Centuria on behalf of investors directly from earnings. Investors pay no personal income tax on the investment during its term – and, if they hold it for more than ten years, pay no tax on withdrawals. Annual tax reporting is taken care of and reported by Centuria and there is flexibility about contributions and withdrawals.

Already, two specialist investment groups, Mason Stevens and Implemented Portfolios, are offering their own bespoke product TaxAstute Series Funds to clients.

According to Centuria CEO, John McBain, the development of the TaxAstute Series is an intelligent response to a growing demand for tax effective investment outside of superannuation.

“While insurance bonds are nothing new, and have enjoyed enduring favour among more knowledgeable investors, they have sometimes been overlooked by advisers who want to recommend products that sit more squarely with a particular asset allocation or underlying investment focus,” he said.

“We have turned that old-school approach on its head by creating a product that enables investment managers to do what they do best – select and manage the underlying investment – while drawing on Centuria’s longstanding expertise and understanding about how to make this style of investment work best for investors.”

According to Thomas Bignill, CEO of Mason Stevens, a major drawcard of the TaxAstute Series was precisely this ability to retain control over the underlying funds.

“This has given us the opportunity to broaden the offering to our clients without compromising in the slightest in our underlying investor promise: we still make the choices regarding the investment itself, with the significant added advantage of the kinds of tax benefits that might only otherwise attach to superannuation,” he said.

Santi Burridge, MD of Implemented Portfolios, also highlighted the importance of being able to offer clients flexibility in their investment choices.

“Not all clients want to be locked into super alone as their long term investment vehicle,” he said. “We can now offer them an equally tax effective alternative that they can use as they wish – whether to complement their super or to support other long term goals such as saving for a property or setting aside an education fund. In addition, from an estate planning perspective, tax treatment of assets passed on via this vehicle is exceptionally appealing – another big plus.”

Mr McBain said that growing awareness of the benefits offered by the TaxAstute model has resulted in significantly increased interest from other dealer groups and advisers keen to provide clients with a new solution.

“Basically it’s a case of watch this space – it has been very gratifying to take a partnership approach with investment leaders in bringing a new product to market. We will be rolling out more Funds in the coming months and look forward to seeing investors reap the very real benefits.”