Investment bonds: simplifying family trusts


Investment bonds have a range of tax advantages and features that provide an efficient and profitable alternative for long-term wealth creation, estate planning and intergenerational wealth transfer. Investors in investment bonds will generally not have a personal or capital gains tax return or liability.

A discretionary or family trust can reduce or even eliminate the level of its distributable income if it is invested in one or more investment bonds. This strategy can help discretionary or family trusts that have assets that generate excess distributable income.

No annual income to distribute for the trust

Unlike other investments such as stocks, managed funds and term deposits, investment bonds do not distribute “taxable income” to investors unless a withdrawal is made within the first 10 years. . As long as the trust remains invested in investment bonds, it has no annual income to distribute.

No need for a beneficiary company

This strategy also eliminates the need for a beneficiary company. It also means that punitive tax levels on undistributed trust income do not apply to investment bond income, while higher tax rates that apply to minor beneficiaries do not apply. either at stake because there is no distributable income from the investment certificate. if he has been detained for at least 10 years.

Non-taxable benefits on the death of the insured

On the death of the person insured under the investment bond, the proceeds may be distributed at any time tax-free to the other beneficiaries in accordance with the rules of the trust.

How do investment bonds compare to other investments?

Unlike other investments such as stocks, managed funds, and term deposits, investment bonds offer a simplified, tax-efficient approach with no obligation to distribute taxable income or capital gains to investors, unless ‘a withdrawal is made within the first 10 years.

Switching between investment options within an investment bond also does not result in capital gains tax, as all gains (or losses) are contained within the structure of the bond. ‘investment.

The ability to arbitrate tax, protect assets from creditors, and assist with estate planning, makes investment bonds held by a discretionary or family trust as useful as ever in building wealth.

How can Generation Life help you?

Generation Life is an Australian leader in investment bonds. With a choice of 37 investment options and the leading provider of net cash flow over the past 4 years1, LifeBuilder from Generation Life is a tax-efficient and highly accessible investment solution for the transfer of intergenerational wealth.

Get more information

To learn more about Generation Life and other uses of investment bonds, visit www.genlife.com.au

Or call one of our distribution team members in your area:

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  1. Source: Strategic Insight Actuaries & Researchers – Dec 2017

Disclaimer: Generation Life Limited AFSL 225408 ABN 68 092 843 902 is the issuer of investment bonds (IB). The product disclosure statement should be taken into account in the decision to acquire or hold an IB. This information has been prepared without taking into account anyone’s goals, financial situation or needs.

Catherine van der Veen & Lucy Foster
Co-Managing Director
Generation Life

With a combined experience of 30 years in leadership roles in financial services, Catherine and Lucy lead the design of financial solutions for different generations of Australians.


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