The smart choice for tax effective investing in Education Bonds.



Education often ends up costing much more than we first anticipate. So, when considering effective tax planning for individuals and families, it’s worth exploring the education funds with tax benefits on offer. A Futurity Education Bond shakes up the notion that taxes are inevitable and provides a tax effective investment choice to keep more money going where it should be - to your child’s education.



Education bonds are unique from other forms of investment as they offer a variety of tax benefits which can make them a great choice for tax effective investing. Let’s take a look at what makes Futurity Education Bonds effective in tax planning for individuals and families, and why they’re a popular option for saving to fund education costs.



Understand the tax benefits of Education Bonds

Understanding investment bond rules



The graph below demonstrates the special tax rules that apply for education bonds if you happen to withdraw your investment earnings for something other than to fund education costs.



Understanding Investment Bond tax rules



If you receive any investment earnings after 10 years from the date of your initial contribution, and you also satisfy the 125 percent rule, the amount you receive will be tax free in your hands.


The 125 percent rule allows you to make additional contributions to your Bond each year, provided they’re not more than 125 percent of the previous Bond year’s total contributions. Of course, you may make unlimited contributions in your Bond’s first year.


If you withdraw investment earnings within the 10 year period, an apportioned amount (refer to graph) will count as part of your assessable income and be subject to tax at your marginal rate. But the good news is you will be entitled to receive a 30 percent tax rebate on the assessable amount, to compensate for the tax already paid by us on fund earnings.



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The product and taxation information in this website and accompanying documents is current as at the date of its production. The information is summarised and based upon our general understanding of Taxation Law (which is subject to change over time). This information is of a general nature and does not take into account your objectives, financial situation or needs. It does not (and is not intended to) contain any recommendations, statements of opinion or advice. Please refer to the PDS for further information and contact your taxation adviser or Financial Adviser if you are unsure and require advice. The ATO website can be accessed at: ato.gov.au