Investment bonds offer a number of features that investors should consider and compare with alternative products as summarised below:
Any person, including parents and grandparents, are now able to provide an endowment for the future financial needs of children and grandchildren. This special feature is called the Centuria LifeGoals Child Plan.
Investors can nominate a child from 0-16 years of age who will become the owner of this investment upon reaching the nominated vesting age, which can range between 10-25 years of age. This innovative plan has no personal tax or CGT obligations for you or the child.
An investor who is not an Australian tax resident (who can be an Australian living overseas as much as a foreign investor) is treated similarly to a resident, for Australian tax purposes.
Equal entitlement applies to the bond tax offset (unlike an imputation credit from franked dividends).
Also, no non-resident withholding tax deduction is requirement – on a withdrawal by a non-resident bond investor.
Investment bonds allow investors to access many asset classes and provide a market-linked investment vehicle to help meet investment goals.
Investors may switch their investments online throughout the period of the bond.
There is no limit on the amount that can be invested to establish an investment bond. Investors can also make subsequent investments up to maximum of 125% of the previous year’s contribution without restarting the ten year period. Investors can choose to start new investment bonds if higher amounts are to be invested.
The ownership of the investment bond can be easily assigned or transferred at any time. The original start date is retained for tax purposes. This may not be achievable within a company structure without creating tax liabilities.
Investment bonds provide simplicity as earnings are automatically reinvested in the bond. This means reinvestment dates do not need to be tracked for capital gains tax purposes. Investors can also switch between investment options without triggering personal capital gains tax.
Investment bonds give investors the flexibility to access funds at any time. This can act as a hedge against restricted access to superannuation.
It is easy to set up a Bond and a regular investment plan without worrying about taxation each year.
Investment bonds may offer protection from creditors in the case of bankruptcy (subject to certain rules), which may not be possible through a company structure.
Under current tax and privacy rules, a bond investment does not require a TFN to be quoted. This also means no high tax deductions from withdrawals, where a TFN has not been quoted.