The investment that shields you from the new tax changes

Morning Star AU

18 hours ago

Australia’s changes to the way capital gains are taxed have investors looking more closely at the tax they pay on their investments.One option that has started to attract more attention is an ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Most Discussed

{"basename":"","ssrTDKData":{"titleTemplate":"%s - Tiger Brokers","title":"Tiger Brokers | Global Stocks, Options & Futures Trading App","description":"Tiger Brokers, one-stop investment in US stocks, SGX stocks, HK stocks, A-shares & other global assets. One of the best stock trading platforms in Singapore.","keywords":"tiger brokers,tiger trade,tiger brokers singapore,broker online,stock trading in singapore,share trading singapore,brokerage firm singapore,trading app,stock broker singapore,stock trading platforms,trading account","social":{"ogDescription":"Tiger Brokers, one-stop investment in US stocks, SGX stocks, HK stocks, A-shares & other global assets. One of the best stock trading platforms in Singapore.","ogImage":"https://c1.itigergrowtha.com/portal5/static/media/og-logo.0a0bd8dc.png","ogUrl":"https://www.itiger.com/news/2664822145"},"companyName":"Tiger Brokers"},"pageData":{"isMobile":false,"isTiger":false,"isTTM":true,"region":"SGP","license":"TBSG","edition":"fundamental"},"isCrawlerRequest":true,"__swrFallback__":{"@#url:\"https://stock-news.skytigris.cn/v3/news\",params:#id:\"2664822145\",edition:\"fundamental\",auth_exemption:1,,,undefined,":{"share":"https://ttm.financial/m/news/2664822145?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2026-09-03 00:00","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2664822145","market":"nz","top_or_hot":-1,"title":"The investment that shields you from the new tax changes","media":"Morning Star AU","content":"<div>\n<p>Australia’s changes to the way capital gains are taxed have investors looking more closely at the tax they pay on their investments.One option that has started to attract more attention is an ...</p>\n\n<a href=\"https://www.morningstar.com.au/personal-finance/investment-that-shields-you-new-tax-changes\">Source Link</a>\n\n</div>\n","source":"morningstar_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>The investment that shields you from the new tax changes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThe investment that shields you from the new tax changes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2026-09-03 00:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.morningstar.com.au/personal-finance/investment-that-shields-you-new-tax-changes><strong>Morning Star AU</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Australia’s changes to the way capital gains are taxed have investors looking more closely at the tax they pay on their investments.One option that has started to attract more attention is an ...</p>\n\n<a href=\"https://www.morningstar.com.au/personal-finance/investment-that-shields-you-new-tax-changes\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BNDW","symbol_name":"Vanguard Total World Bond ETF","start_time":0,"source_url":"https://www.morningstar.com.au/personal-finance/investment-that-shields-you-new-tax-changes","article_id":"2664822145","we_media_id":null,"thumbnails":[],"rights":{"source":"morningstar_stock","url":"https://www.morningstar.com.au/personal-finance/investment-that-shields-you-new-tax-changes","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2664822145","pubTimestamp":1788364800,"columns":[],"sourceInfo":{"source_id":"morningstar_stock","name":"Morning Star"},"weMediaInfo":null,"summary":"Mark LaMonica: I don’t think it’s a new interest, Shani.Jayamanne: Is it an old interest?LaMonica: It’s not an old interest. I think it’s something that popped up on social media, and you know what happens. You watch something, then they serve it to you more. And so, I went through a little, we’ll call it a phase. Jayamanne: Okay, what was a phase for?LaMonica: Okay. About rescuing turtles.Jayamanne: What particularly about turtles were the videos?LaMonica: Well, apparently, I don’t know much about turtles. These are sea turtles.Jayamanne: Yeah.LaMonica: By the way. Apparently they have this issue where barnacles attach to them. And over time, it’s hard for them to swim because they get weighed down. And so, there are turtle rescue services, and they take the turtle out of the ocean, and then they remove the barnacles.Jayamanne: Sorry, I can’t keep it together.LaMonica: They remove the barnacles from the turtles, and this saves the turtles. So, I think it’s actually quite nice.Jayamann","collect":0,"end_time":0,"defaultTopTitle":"morningstar.com.au","property":[],"viewcount":null,"language":"en","relate_stocks":{"BNDW":"Vanguard Total World Bond ETF"},"translate_title":"保护您免受新税收变化影响的投资","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BNDW":0.9},"content_text":"Australia’s changes to the way capital gains are taxed have investors looking more closely at the tax they pay on their investments.One option that has started to attract more attention is an investment bond. Investment bonds have never exactly been the most talked-about investment vehicle, but with the tax treatment of capital gains changing, there is renewed interest in whether their tax structure could make them useful for some investors.In the latest episode of Investing Compass, we take a closer look at how investment bonds work, who they may suit and, importantly, whether their potential tax advantages outweigh their costs.Other insights from Morningstar about the tax changes:Building wealth after the CGT changes. Higher CGT makes building wealth harder but financial independence is still achievable for thoughtful investors.Should you pay off your mortgage or invest after the latest tax changes? The equation has shifted. Find out what your best option could be in this Investing Compass episode.Unconventional wisdom: Five ways to invest smarter under the new tax regime. Higher taxes on capital gains have shifted the relative attractiveness of investments, structures and strategies.Future Focus: The dangerous assumption behind the new CGT changes. Investing is not just a rich person’s sport anymore, and it’s dangerous tax policy to think it is.You can find the transcript below:Shani Jayamanne: Welcome to another episode of Investing Compass. Before we begin, a quick note that the information contained in this podcast is general in nature. It does not take into consideration your personal situation, circumstances, or needs.So, Mark, you’ve found a new interest. Do you want to talk a little bit about this?Mark LaMonica: I don’t think it’s a new interest, Shani.Jayamanne: Is it an old interest?LaMonica: It’s not an old interest. I think it’s something that popped up on social media, and you know what happens. You watch something, then they serve it to you more. And so, I went through a little, we’ll call it a phase. Jayamanne: Okay, what was a phase for? Because you kept sending it to me too, and I refused to watch it because I didn’t want it on my algorithm. So…LaMonica: Okay. About rescuing turtles.Jayamanne: What particularly about turtles were the videos?LaMonica: Well, apparently, I don’t know much about turtles. These are sea turtles.Jayamanne: Yeah.LaMonica: By the way. Apparently they have this issue where barnacles attach to them. And over time, it’s hard for them to swim because they get weighed down. And so, there are turtle rescue services, and they take the turtle out of the ocean, and then they remove the barnacles.Jayamanne: Sorry, I can’t keep it together.LaMonica: They remove the barnacles from the turtles, and this saves the turtles. So, I think it’s actually quite nice.Jayamanne: Okay. Do you think that you will expand into, like related peripheral content? Like, have you heard of Dr. Pimple Popper?LaMonica: I have not. Does that save turtles?Jayamanne: No. But I don’t think it’s a saving the turtles part that you’re interested in. It’s the removing barnacle part. You find that quite satisfying.LaMonica: I just watch it because Instagram provides it for me.Jayamanne: Okay, let’s use that as the reason why you watch it. What are we going to be talking about today, Mark?LaMonica: We’re going to be talking about something that is probably just as niche as turtle rescues and barnacle removal. But of course, it’s related to the investment world. And even though it is very niche, much like turtles, you are laughing a lot at me. Much like turtles, we do think that there’s a possibility this could catch on.Jayamanne: And the reason that there may be more interest is because of the changes in the way capital gains taxes are treated going forward.LaMonica: And of course, the impact of those tax increases will vary because they are based on the length of the holding period and the level of inflation. But under many scenarios, investors will pay more tax than that old 50% long-term capital gains discount. So naturally, investors are looking for ways to reduce their tax. Jayamanne: And we’ve talked before about some of the things that investors can consider doing in response to the new tax. As a reminder, it is considering how franked dividends are now treated more favorably than capital gains, how Super is even more attractive, and how your behavior has a bigger impact on your after-tax returns. LaMonica: And our message again, we did say this on our previous podcast, Shani, but it’s not to overreact to the tax changes. We know that many investors are frustrated, and certainly that’s understandable. And as we said, in many of these scenarios, you will pay more tax, but investing is still the best way to gain financial freedom even after this change.Jayamanne: And we’ve already seen investors alter their approach after the tax changes were announced. For example, there has been record inflows into dividend-focused products. But today we want to talk about another option for investors, and that is investment bonds.LaMonica: So why don’t we start with a quick definition? What’s an investment bond, Shani?Jayamanne: An investment bond is an investment vehicle issued by insurance companies. The summary is that you give your money to an insurance company and then they invest it in an option that you select, like Aussie Shares, Global Shares, or bonds. LaMonica: The kicker is the investment bond pays tax at a 30% rate. So, you never get a tax bill. So, it’ll just pay the tax for you. The investment will just compound less that tax.Jayamanne: The tax treatment is because even though this sounds like a managed fund, it is actually a life insurance policy.LaMonica: And there are, of course, some rules for investment bonds. The first is something called the 10-year rule, which is a pretty good name for it. So, if you hold the investment bond for a decade, you can withdraw the balance without paying any additional tax. If you take it out before 10 years is up, you owe taxes on the earnings at your marginal tax rate, but you do get credit for that 30% tax owed.Jayamanne: There is some complexity around this. If you withdraw it from years one to eight, you owe the full tax, and there is a scale where you only owe a portion of the tax difference between your marginal tax rate and the 30% that was already paid. In year nine, you owe tax on two-thirds of the earnings, and during year 10 you owe one-third of the earnings.LaMonica: Okay, there’s another rule. It is called the 125% rule. So over time you’re able to continue to contribute to the investment bond without resetting that 10-year rule once you start it. But there are limits to how much you can contribute. So, in the first year there’s no limit to the contribution level. But after that, the contribution is capped at 125% of the previous year’s contribution.Jayamanne: And this 125% rule is an important consideration because if for some reason you miss a year of contributions, if you’re under financial stress, then you won’t be able to make any future contributions. Let’s talk about who an investment bond may be right for. Obviously the first thing you have to do is you have to be in a marginal tax rate that is higher than 30%. You also need to have a long-term time horizon of at least 10 years for the cash if you’re putting that into an investment bond.LaMonica: And we should also talk about Super. So, 10-years is obviously a fairly long timeframe but depending upon your age it might be longer until you hit your preservation age. So, you might be investing, you might be using this investment bond to invest for a goal before retirement. But it is worth noting that Super is a far superior tax environment. So, if you have any spare concessional or non-concessional contributions, you might want to consider putting that money into Super.Jayamanne: Another consideration is fees. According to Canstar, you can expect to pay a fee of between 0.6% and 1.5%. The range is based on the investment option and the provider that you do select.LaMonica: And that is a very high fee. In the case of 1.5% it’s extremely high and obviously a lot more than you would pay for an ETF or managed fund, outside of an investment bond. Jayamanne: It’s really important as well that you consider the investment options. We looked through a couple of providers and there was a range of investment options from passive funds, to multi-asset funds, to actively managed funds in some pretty narrowly focused asset classes.LaMonica: And the tax effectiveness of the underlying investments will have a big impact on your outcome. So, even if that 30% tax is lower than your marginal tax rate, which is the only reason you’d use an investment bond, that advantage can be eaten away pretty quickly, if there’s a significant amount of capital gains generated each year, because that 30% tax will be applied and that will slow your compounding. So, you can when you combine that with higher fees it could erode any advantages from an investment bond.Jayamanne: And this is all about behavior and while it’s unlikely you will have different behavior in an investment bond and outside an investment bond, just remember that if you buy a broad market passive index fund with little distributed capital gains or a portfolio of shares and hold them over the long term, you can significantly reduce your tax liability even under the new rules.LaMonica: And this is of course because the longer you hold an investment, the bigger that capital gains discount, you will get.Jayamanne: So, let’s talk about another benefit of investment bonds, that is around estate planning. As we said earlier, an investment bond is classified as a life insurance policy. When the owner of the investment bond passes away, the proceeds are paid to the nominated beneficiary.LaMonica: And if you don’t nominate anyone the benefit is paid to your estate, but you can select whoever you want as a beneficiary. This could be an individual, could be a company, a trust or a charity.Jayamanne: And in a previous episode we did talk about how many wills are contested, but the transfer of an investment bond is done outside of the will which means probate and estate administration is bypassed. And so that means that generally they aren’t subject to estate challenges although in New South Wales they could be considered part of a notional estate.LaMonica: And one big difference is the beneficiary gets the money tax-free even if that 10-year period isn’t completed.Jayamanne: And there is one variation of investment bonds those are education bonds. They basically work the same way but there is a bonus feature which is the education tax benefit.LaMonica: And when you take earnings out of an education bond and then spend it on eligible education expenses like school fees or uniforms or textbooks, you get a refund equal to $30 for every $70 of earnings. So basically, this means you get a refund for the 30% tax that has been paid. If you don’t spend them on these approved educational purposes, then the same rules as an investment bond apply.Jayamanne: So, like any investment option it is important to understand the details of how investment bonds work before considering them. If you are considering them, read up on the provider website, including the PDS and detailed information about the investment options.LaMonica: Yeah. And if you want to investigate this more, some of the providers – and this is obviously not an endorsement – some of the providers in local market include Generation Life, Australian Unity and KeyInvest.So, that was a pretty short episode. But what people that were listening or viewing don’t know is it took a long time, because Shani kept laughing at turtles and the various turtle jokes that I made. So, thank you for getting through this, Shani, and thank you all for listening.(Disclaimer: Any advice in this podcast is general advice or regulated financial advice under New Zealand law prepared by Morningstar Australasia Proprietary Limited and/or Morningstar Research Limited without reference to your financial objectives, situations or needs. You should consider the advice in light of these matters and any relevant product disclosure statement before making any decision to invest. To obtain advice for your own situation, contact a financial advisor.)Invest Your WayA message from Mark and ShaniFor the past five years, we’ve released a weekly podcast and written on morningstar.com.au to arm you with the tools to invest successfully. We’ve always strived to provide independent, thoughtful analysis, backed by the work of hundreds of researchers and professionals at Morningstar. We’ve shared our journeys with you, and you’ve shared back. We’ve listened to what you’re after and created a companion for your investing journey – Invest Your Way. Invest Your Way is a book that focuses on the investor, instead of the investments. It is a guide to successful investing, with actionable insights and practical applications.If anyone would like to support this project you can buy the book now. Thanks in advance!Purchase from AmazonPurchase from Booktopia","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"}}}