Tax effective wealth building


Meet Andy. He’s 30, lives in Perth and has just launched a business designing apps for larger companies. Andy is extremely excited about his new venture and money is already starting to come in, but he’s wary about what comes next.

Andy realises he is going to become wealthier as his business takes off, but – after watching friends in similar situations having to pay high tax bills – he wants to protect his new found wealth while also growing it in the long term.

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

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 Andy’s bespoke solution

At 30 years old and after his first taste of success, Andy uses Centuria LifeGoals to grow profits from a huge business deal in a tax efficient way.

He takes $25,000 and invests it in a Centuria LifeGoals account with a growth portfolio selected as his underlying investment. As his business continues to generate cash, Andy regularly tops up his Centuria LifeGoals investment with $500 per month in the first year and increases this by 10% per annum, thereby meeting the 125% rule every year.

After 10 years, Andy has contributed a total of $120,625 in investment and the value of his Centuria LifeGoals is now $148,007 after tax and fees. As he has met the 125% rule throughout this investment period, Andy can now withdraw the entire sum without any tax to pay.

Importantly, Andy still had the option to withdraw money before the 10 year point was reached. 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 in year nine only 2/3 of earnings are assessable and in year 10 only 1/3 of the earnings are assessable.

Andy has been able to fulfil his business dreams in a tax effective manner. For someone who made a lot of money developing and designing bespoke apps, the amount of flexibility and tax efficiency Centuria LifeGoals has given to Andy has been ideal!

Elevate tax effective investing ideas using LIFT, like Andy who was looking for a tax effective wealth building solution. Discover now.

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.

Which investor profile are you?

LifeGoals can be used for a number of investment scenarios. Which investor profile are you?

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