Investment bonds offer unique blending between a life insurance policy and an investment product. They are taxed internally at a maximum rate of 30%, often lower due to tax offsets, and after 10 years, all withdrawals are tax-free. This makes them especially beneficial for high- income earners who have reached their superannuation contribution limits, offering a flexible alternative with fewer restrictions.

They also serve as excellent estate planning tools, allowing for direct wealth transfers to beneficiaries and bypassing the estate administration process.

Key benefits include:

  • Tax efficiency: Earnings are taxed within the bond at no higher than 30%, relieving personal taxes especially in the top marginal tax bracket.
  • No distributions: Unlike managed funds, income is not distributed annually.
  • Estate planning: Bonds bypass wills, protecting wealth from estate disputes and creditors, and can be customised for blended family scenarios.
  • Accessibility: Funds are accessible at any time, with optimal tax benefits after 10 years, and ownership transfers can be made tax-free.
  • Flexibility: You can start a bond with any amount and add to it as long as annual contributions do not exceed 125% of those in the previous year.

While investment bonds may have higher fees compared to other investment options, their flexibility and tax advantages make them a viable option for diverse financial goals. They suit those looking for medium-term strategies like saving for their children, high-income earners, and families planning for future generations.

In summary, investment bonds are versatile and efficient tools for wealth growth and estate planning, offering significant tax benefits and flexible access to funds. They fill the gap between superannuation and direct investments, providing a balanced approach to financial planning for Australians.

Article authored by HLB Wealth Financial Adviser Brendan Bate, who can be contacted at bbate@hlbwa.com.au

This article first appeared in the Autumn 2025 issue of HLB Mann Judd Perth’s Client Alert.

Brendan Bate (ASIC No. 1272327) and HLB Wealth Pty Ltd (ASIC No. 428645) are Authorised Representatives of Paragem Pty Ltd (“Paragem”), ABN 16 108 571 875, AFSL No. 297276.
Disclaimer: The information contained in this article has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. Before you make any decision regarding any information, strategies or products mentioned in this article, you should consult your financial adviser to consider whether that is appropriate having regard to your personal objectives, financial situation and needs. Please note that any audit, taxation and accounting services are provided by HLB Mann Judd and are not within the authority of Paragem’s AFSL No. 297276.