For more information, or to find the answers to other questions you might have, please download the PDS or view our additional FAQs.
The 10 Year Tax Rule is a tax incentive specific to an investment bond, being an investment type of life insurance policy, that allows income in the Fund to be taxed at the ordinary life insurance business (‘Business’) tax rate (currently 30%) and paid for by the issuer.
As an investor, you do not need to declare any income accrued on your investment in your tax return or keep any capital gains record whilst you are invested in the Fund.
When you make a withdrawal from the fund after 10 years, and after meeting the 125% Contribution Rule, income on your withdrawal is not assessable income and therefore does not need to be declared on your personal income tax return.
Unless in certain circumstances, any withdrawal within the first 10 years will result in some level of assessable income. The investor will need to declare the assessable income in their personal tax return in the year it was withdrawn.
In order to receive investment earnings tax-free after 10 years, you must meet the 125% Contribution Rule. Whilst there is no limit as to the amount you can invest in the first year of your policy (this will set your benchmark), each following year you can make the same contribution you did the previous year plus an additional 25%, therefore totalling 125%. If you keep to the 125% contribution limit, then your withdrawals after 10 years will be tax free. This means that in order to withdraw your funds and have no assessable income, you will need to keep your investment for a further 10 years from this point. Otherwise, any income component of your withdrawals during this period will be assessable income.
You can access your money at any time. If any withdrawals are made in the first ten (10) years, then investment earnings can be assessable income for personal income tax purposes subject to a tax offset amount.
Yes, a child aged between 10 and under 16 years old is able to take out a policy in their name with parental or guardian consent. A child who is a policy owner is not allowed to make investment decisions, which includes switching, beneficiary nominations or transfer of ownership. The child will be the Life Insured listed on the policy.
Yes, if you change your mind for any reason, simply provide written notice of your intention to cancel your Foresters Financial Investment Bond investment and return your Certificate of Membership within thirty (30) days from the date of issue or such other period permitted by relevant legislation. Foresters Financial will then refund all money contributed (subject to any applicable local State or Territory laws) less any fees, taxes and applicable stamp duty, after adjustment for any movement in the value of your unit-linked investment options. The cooling off period does not apply to applications related to contributions, switching, savings plans, or after exercising rights or for wholesale, sophisticated or professional investors.