Understand the tax benefits of Education Bonds
Lower tax rates
You don't need to declare on going earnings in your annual tax return.
Due to our unique structure, we pay tax on your behalf on the bond’s ongoing investment earnings at a tax rate of up to 30%. This may be particularly appealing to those on a higher personal tax rate, as you could otherwise be attracting a personal tax rate of up to 47% (including Medicare Levy) on earnings generated from most other investments.
Education Tax Benefit
The Education Tax Benefit is a special concession in tax law that represents a refund of fund tax already paid by us.
When you make a withdrawal from your EdSaver for the purpose of funding education costs, you’ll enjoy the Education Tax Benefit. This amounts to an additional $30 for every $70 withdrawn from your investment earnings, when paid as education benefits.
An income beneficiary is one who receives income from a trust. In this case, and if used for Education purposes, this would be the nominated student beneficiary, not you as the owner of the EdSaver.
They could pay little or even no tax on the assessable amount if their taxable income is below their tax free threshold.
Note: the current minor tax-free threshold is $416.
You can withdraw your funds at any time for any purpose.
If you withdraw for non-education purposes, the investment bond rules will apply in regards to the tax payable.
Importantly, if you have held your Bond for more than 10 years, you will generally receive a tax-free withdrawal.