How does an investment bond work?
Investment bonds provide unique tax advantages that support a range of investment and financial planning scenarios.
The investment is fully tax-paid by the provider after a ten-year period with nothing to report to the ATO while invested or after ten years.
There are no withdrawal restrictions – funds are accessible anytime. If an investor withdraws funds before the end of the ten-year period, earnings (growth in the balance) will be assessed as income in the year of the withdrawal. A 30% tax-offset will apply to reduce tax already applied by the bond provider.
You can make changes, such as switch investment options, within the bond without breaking the ten-year rule and triggering a tax event.