Cash & Bonds IOOF Wealthbuilder

Discussion in 'Other Asset Classes' started by Martin73, 22nd Oct, 2017.

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  1. Martin73

    Martin73 Well-Known Member

    Joined:
    1st Mar, 2017
    Posts:
    178
    Location:
    Canberra
    Hi - any feedback on using the IOOF Wealthbuilder investment bond and with the internal gearing option?

    My situation is that I earn the majority of my income from a sole source, well and truly in the top marginal tax bracket and consequently I’m looking for tax effective investments. I’ve maxed out my salary sacrifice contributions to super as well. I’ve already got the PPOR paid off, 3 IPs (1 NRAS, 2 new builds) and will be dipping my large toe into the LIC/ETF pool shortly. No dependents, no spouse and another 15-20 years of working life planned.

    I understand that if I borrow to invest in LICs/ETFs that I can claim the interest as a tax deduction but can I do the same for investing into an insurance bond?

    Are the borrowings associated with the Wealthbuilder Loan facility deductible?

    http://www.ioof.com.au/__data/asset...uilder-Loan-Facility-flyer-September-2017.pdf
     
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  2. Rakhi Withanage

    Rakhi Withanage Member

    Joined:
    30th Mar, 2017
    Posts:
    15
    Location:
    Adelaide, SA
    Hi Martin,

    Interest is only deductible if it is used to generate income. Investment bonds are internally taxed at 30% and the income isn’t distributed to the owner therefore it isn’t tax deductible. Furthermore, for investment bonds to be tax effective it is recommended to hold the bonds for 10 years.

    Few of our high income earning clients set up bucket companies to invest through which are taxed at 30% and have no restrictions on when you can and cannot withdraw money.
     
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  3. Martin73

    Martin73 Well-Known Member

    Joined:
    1st Mar, 2017
    Posts:
    178
    Location:
    Canberra
    2 people like this.