Investment bonds gaining favour post-budget

Investment bonds gaining favour post-budget

Adrian Flores
— 1 minute read

With superannuation losing some of its lustre for high-net-wealth investors in the wake of last week's federal budget, alternative strategies such as investment bonds could come to the fore, says IOOF.

IOOF's national sales manager of investments, Danny Dalton, said Australians' ability to make non-concessional contributions has been "severely reduced" with proposed changes to super in last week's federal budget.

"This proposal is ... hampering the opportunity for many Australians to make additional tax-effective contributions to support their retirement," he said.


IOOF investment specialist Sue Herrald suggested that investment bonds are one alternative structure that can result in a more tax-effective outcome than direct investment

"Investment bonds can offer investors a capped tax rate of 30 per cent on earnings, which are taxed within the bond," Ms Herrald said.

"By having earning taxed internally, there are no complications with investors' personal tax returns."

She added that another benefit of an investment bond is the possibility of establishing a regular withdrawal plan.

"This would allow someone to make after-tax contributions above the $500,000 limit as well as receive a regular income stream from a tax environment capped at 30 per cent, complementing their super capital," Ms Herrald said.

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Investment bonds gaining favour post-budget
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