Tax effective education bonds are a good purpose built financial investment strategy that pays for your child’s or grandchild’s education.

Why tax effective education bonds?

💡 Why are they a good financial investment?

It costs around $280,000 for one child in private education so planning for it upfront or covering the majority of these costs with tax advantages is a wise financial decision. Education bonds are a great tax effective purpose built investment product to pay for your children’s or grandchildren’s education.

💡 The Value of Education Bonds.

The value of you preparing for your child’s / children‘s education or a grandparent who wishes to help their grandchildren’s education costs can set up an education bond that can be withdrawn upon if necessary, at any time or for any purpose. Your children / grandchildren are appointed as education beneficiaries through these education bonds.

Why tax effective education bonds are a good financial strategy.

Education bonds are tax-paid investments, this means the investment bond company pays the tax on the bond and ongoing investment earnings throughout the term of the investment.

The investor / owner of the education bonds does not need to worry about tax reporting, paying tax or capital gains tax. Because you as the education bond owner, you have access to the capital and can withdraw your capital at any time, and for any reason or purpose, without creating a tax event.

The benefits of education bonds

You can also access the valuable education tax benefits generated by education benefit claims. You also have the flexibility to add more children and grandchildren as beneficiaries at any time.

If you are the grandparent you can also appoint your own children as Bond Guardians to administer the bond in the best interests of the beneficiaries in the event of your death.

If you die before the beneficiaries turn 18 the education bond will shift to testamentary status, meaning the assets are received as an education benefit and may be subject to more favourable adult tax rates.

💰 Transferring tax effective education bonds

Additionally, the final bond balance may be transferred to your beneficiaries at a nominated date without any personal tax or capital gains tax liabilities.

An education bond is a non-estate asset, so the bond proceeds cannot be contested as part of a will. And an education bond also provides confidentiality, resolving potential conflicts and in equities across the wider family.

💰 The advantages of tax effective education bonds

The advantage of a education bond allows for you to have access to this money in the future, should you need it for personal use (if you ever need to), with out triggering attacks event as tax is already paid.

Another advantage of tax effective education bonds is that you can make sure the investment remains in place when you leave the planet.

❇️ If you would like to know more or discuss and or incorporate this form of investing as part of your long term investment strategy call (08) 7111 0022 or book a 15 minute chat here to see if it fits in with your overall financial goals.

Arthur Panagis
Author, Founder, Wealth Coach and Financial Strategist

B.Bus (Accountant)
Grad Dip (Financial Planning)
Professional Certificate in Self Managed Super Funds
ASX Listed Equities Accreditation
Tax (financial) Advisor

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Disclaimer: This article is factual information only. It is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. The information in the article is reliable at the time of distribution, but may not be complete or accurate in the future.