Personal tax and implications for Aussie savings from the Budget

From

Michael Blake, Head of Centuria Life (Centuria Capital’s investment bonds business), comments on the 2018 Federal Budget.

“Australians will now have more money in their pockets as a result of the changes to personal tax rates announced in tonight’s Budget. While it may seem a modest amount to households, in fact with low and middle income earners set to be have up to $530 more a year, this is a great opportunity to save this extra money. $500 is enough to invest in a vehicle such as an investment bond, and reap the benefits in the future.

“As the Treasurer has pointed out, retirement income should be a priority for all Australians, and we all have other important interim long-term financial goals we continue to aim towards, that make all the difference to Australian lives.

“We know that an effective way to do this is with ‘set-and-forget’ type vehicles, such as investment bonds. Investment bonds are highly tax-effective as they are taxed at the company tax rate of 30%, rather than the investor’s personal rate, and if they are held for 10 years, proceeds are distributed tax free.

“Vehicles like investment bonds that offer the advantages of compound interest, are flexible – allowing for additional contributions each year and access to the funds at any time – and offer very low barriers to entry, continue to be great complimentary options to super that people should consider in this environment.”

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