Superannuation is the most tax effective way to save for retirement but for many clients, Superannuation alone is not enough. These days, Super has many restrictions, such as not being able to withdraw funds until preservation age, limits to tax concessional contributions and ‘Caps’ on what can be invested. There are also work test rules.
The underlying legislation for tax paid investment bonds is the Life Act, which does not have the same restrictions.
As an alternative to Super, KeyInvest Life Events Bond can compliment and enhance your pre/post retirement savings.
- No age restrictions, work test rules or contributions caps. You can contribute any amount each year subject to the 125% rule.
- Full control/access to your funds at any time by lump sums or regular withdrawals,
- Can be set up as a tax effective regular withdrawal income stream
- May be set up as a ‘pre/non super’ transition to retirement income stream and help preserve the longevity of your Super as an asset
- Withdrawals made in the first ten years are eligible for a full 30% tax offset/rebate each year, which can be used to offset against other taxable income you may have.
- Ability to nominate numerous beneficiaries and your Bond proceeds are tax free on death, regardless of how long your Bond has been in place. Also your Bond proceeds would not need Probate to be granted.
- No death benefits tax – unlike Superannuation, unless there is a ‘SIS’ dependant, ie tax dependant nominated as your beneficiary at your death, your Super balance may attract Death Benefits tax, depending on what the underlying taxable components are, which can significantly reduce inheritance to those intended.
In Tax Paid Bonds, no such Death Taxes apply.
The proceeds/allocations are paid out tax free and in full to your nominated beneficiaries, according to your instructions.
- Particularly helpful when inheritances may be received later in life and as an alternative when Super is not an option.