Investment Bonds Insights August 2016
Welcome to our August 2016 edition of Investment Insights
Looking beyond super for tax effective investment structures
With proposed changes to superannuation announced in the 2016 Federal Budget, many investors are reviewing their retirement investment options.
Company Structures and Investment Bonds are two investment structures financial advisers are considering as a means of supplementing their client’s superannuation in light of the proposed changes.
Let’s take a look at them side by side.
Company structures may suit high net wealth clients who are happy to set up a private company to hold investments. But this may only be a tax deferral mechanism, as eventually funds may need to be paid out of the company and personal tax be payable at the investor’s marginal tax rate, less any franking credits and capital gains tax discounts.
Company structures also have other limitations:
- Tax is paid within the Investment Bond structure at the company tax rate less
- Capital gains tax reporting or compliance is required.
- The company structure offers little protection from creditors following a bankruptcy event.
- Estate duties may be payable if the investor dies, at a loss to the
Investment Bonds should be considered as another long-term strategy given that personal tax obligations no longer apply after 10 years.
Investment Bonds can be a simple and flexible alternative to investing via company structure.
- No personal income tax on your investment during the term
- No declaration of growth or income is required on your income tax return
- No tax on any withdrawals (whether made before or after 10 years) if due to death, disability or serious illness of the Life Insured or unforeseen financial difficulties of the investor
- Investor funds are protected from creditors in the event of bankruptcy (if nominated Life Insured is the investor’s spouse)
- No tax on proceeds paid directly to beneficiaries on death of the Life Insured.
- For more information on how investment bonds compare to investing via a company structure, download.
The table below summarises the returns for all our linked portfolios.
Performance figures are correct to 31 July 2016
|1 month||3 months||6 months||1 year||2 years||3 years||5 years|
|Centuria Growth Bond Fund||3.60%||4.58%||3.87%||7.92%||8.05%||8.47%||7.78%|
|Centuria Balanced Fund||2.61%||4.25%||2.51%||5.17%||5.74%||6.50%||7.33%|
|Centuria High Growth Fund||2.93%||4.69%||1.27%||3.99%||7.49%||7.80%||8.91%|
|Centuria Australian Shares Fund||5.56%||7.01%||5.52%||9.77%||8.38%||9.82%||9.86%|
|Centuria Implemented Portfolios Dynamic Asset Allocation Bond||1.99%||2.60%||5.40%||-0.12%|
|Centuria Cash Plus Fund||2.02%||3.49%||0.92%|
For more information about Centuria’s Investment Bonds please call 1300 50 50 50 or email firstname.lastname@example.org.
We look forward to supporting you and your business throughout 2016.
*Important notice: Performance figures are shown on an after fees and after tax basis and are based on the movement in unit prices over the period. The table is accurate as at 29 February 2016. Past performance is not a reliable indicator of future performance.