Tax effective
wealth building

Meet Mark and Sue. They are a professional couple who live on the Gold Coast. Mark runs a successful business as a travel agent and Sue works in real estate.

They are both making their maximum pre-tax contribution to superannuation of $25,000 per annum and are in the maximum 47%¹ tax bracket. As well as being busy raising two teenage kids, Mark and Sue work very long hours. They want to be in a position to wind down in their mid-fifties once the kids leave home and spend some time abroad while they are young enough to enjoy some adventure travelling.

Mark and Sue understand that superannuation will provide for them in retirement, but if they want to realise their dreams of exploring the globe they will need to plan ahead. With no more school fees to pay, Mark and Sue will be in a position to save more and want to do so in a more tax effective way than investing directly and paying tax at their high personal tax rates.

This is why Mark and Sue chose Centuria LifeGoals, the simple, flexible and tax efficient investment solution giving investors the control to grow wealth in the way they want.

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The Centuria LifeGoals solution

But what is Centuria LifeGoals? This innovative strategy makes use of the increasingly popular investment bond structure, which is essentially a combination of a managed fund and a life insurance policy, to give you a say in how you want to invest. The most exciting features of Centuria LifeGoals include:

The investment bond structure has a 30% tax rate, and you can access your entire Centuria LifeGoals investment with no additional tax to pay if you hold it for 10 years (and meet the 125% rule).
There’s no initial investment amount limit when establishing your Centuria LifeGoals account (you can start from as little as $500).
After this, you can invest up to 125% of the previous year’s contributions, allowing you to put away more money each year (if you exceed this, the 10 year period simply resets).
Unlike superannuation, you have the freedom to withdraw money whenever you want, and if you do so before the 10 year mark the only tax to pay is the difference between the 30% tax paid and your own tax rate¹.

Most importantly, your Centuria LifeGoals investment can be altered to reflect your financial situation as it evolves, while also delivering optimum tax efficiency. To show you how, let’s go back to Andy’s scenario.

Case study: How Centuria LifeGoals became Mark and Sue’s bespoke solution

At 45 years old Mark and Sue commenced a Centuria LifeGoals investment strategy. Having sold an investment property that was becoming time consuming and costly to manage they combined this with their savings to start their investment off with $250,000. They began a regular contribution plan of $1000 per month for the first year which increased by 10% per annum, investing in a growth option.

With the investment held jointly in both names, Mark and Sue nominated both children as beneficiaries of the fund. If something was to happen to them on their travels the funds would go directly to the children with no tax payable.

As Mark is a small business owner, some of his assets may not be protected from creditors, however the funds in the Centuria LifeGoals structure are protected. And unlike residential property there are no significant transaction fees involved.

After 10 years, Mark and Sue have contributed a total of $441,249 and the value of their Centuria LifeGoals is now $584,057* after tax and fees. As they have met the 125% rule throughout this investment period, they can now commence a regular withdrawal over the next 10 years. After tax this calculates to around $5,728* per month but will still be accumulating during this time, amounting to a total of $687,360*.

Importantly, they still had the option to withdraw money before the 10-year point was reached if their circumstances changed. If the investor withdraws money in year eight (or earlier), all of the earnings on the withdrawal are assessable when it comes to tax. However, for withdrawals during the ninth year only 2/3 of earnings are assessable and during the tenth year only 1/3 of the earnings are assessable.

Mark and Sue will be able to fulfil their travel dreams in a tax effective manner. For a couple who have worked very hard for many years raising their children and building successful careers, the flexibility and tax efficiency Centuria LifeGoals can provide in addition to their superannuation contributions will provide them with the early retirement option they deserve.

This scenario has been produced purely to illustrate how Centuria LifeGoals can be used by different investor profiles and are is fictional.
1. In years 9 & 10 this difference is discounted by one-third and two-thirds respectively.
*The investment returns are calculated using the LifeGoals Investment Forecaster Calculator, which can be accessed on the Centuria website (centuria.com.au/investment-bonds/investment-forecaster-tool/). Please refer to the calculator’s “Returns Calculation Assumptions” for the assumptions used in calculating the investment returns figure.
The investment returns are illustrative in nature and should not be taken to provide an estimate of the amount of investment earnings you will receive. The actual returns may differ to the calculated returns. Centuria does not guarantee the performance of the financial product, the repayment of capital or any income or capital return.