Aus-Expats benefit from Tax Efficient Structure.
9 February, 2023
With the changes in superannuation contribution caps and the unattractive tax treatment on Australian Property for Foreign Investors it is of no wonder why Australian Expatriates are seeking alternative ways to build and protect their wealth whilst residing offshore.
Fortunately, being an Australian expatriate offers access to a variety of tax-advantaged investment options, including Investment Insurance Bonds.
What is an Investment Insurance Bond?
An investment bond, also known as an insurance bond, offers the Aus Expat a tax-effective way to invest for their future.
They combine many of the features of a managed fund and superannuation, but with the benefits of eliminating Capital Gains Income Tax and having access to funds at any time. They can also be held by trusts.
Investment bonds can serve a wide range of purposes such as tax-effective wealth creation, family savings planning, retirement planning, estate planning, and asset protection.
What are the tax benefits of using an Investment Bond?
If you hold the bond for at least 10 years the returns and withdrawals from the entire investment, including additional contributions made, will be free from Income and Capital Gains Tax, even when the policy holder moves home and becomes an Australian Resident for Tax purposes.
John (Australian Expatriate) decides to purchase $100,000 worth of Facebook and Commonwealth Bank Shares. Rather than purchasing these shares directly John purchases these shares via his new Offshore Investment Bond. Exactly 10 years later (Now an Australian Resident) John decides to sell his shares at market price for $200,000. Usually John would be required to pay tax on the $100,000 gain of his investment but because John held his investment within an Investment Bond for 10 years the gain is no longer recognized as assessible income for tax purposes.
Benefits of using Investment Bonds
- Unlike Super, money can be withdrawn from the investment bond at any time.
- Investment Bonds are internationally portable. They can be used no matter where you move to in the world.
- Investment Bonds provide Multi-Currency options (AUD, USD, GBP, SGD).
- Investment Bonds offer a wide range of investment options that can be tailored to the owners risk profile (Direct Shares, Managed Funds, ETFs).
- Investment Bonds are the perfect vehicle for Retirement and or Children’s education.
- Investment Bonds can be used as an estate planning tool. Investment bonds sit outside the will so your elected beneficiary cannot be challenged.
Investment bonds are proving to be one of the most beneficial investment strategies for Australian Expatriates in Singapore but like all investments, it is crucial that you seek professional advice before making any investment decision.
Book a complimentary consultation with Expat Financial Advisor Sean Abreu.
Sean Abreu, your trusted expat adviser at IPP, dedicated to financially helping fellow Australian expats living in Singapore
Nothing on this website should be considered financial advice of any kind. Please consult your professional adviser before making any investment decision. Any content on this site relating to tax matters is for general information only, may not be up to date, and should not be considered tax advice of any kind.