Hi,
I have been reading up on the tax benefits of investment bonds. Oddly, I cannot find any piece of official documentation from the ATO that talks about these tax benefits; I can only find these details on external websites. Can anyone point me to documentation from the ATO or government that talks about these tax benefits of investment bonds? (as in official documentation so I can verify that the external sources are correct)
Also, from what I have read, investment bonds are taxed at a fixed 30% rate. Therefore, if your marginal tax rate is above 30%, this is a tax effective investment, see money smart link here for more details. From what I’ve read, the bonds ALWAYS get taxed at 30% by the company the bond is with, this is before the returns even get to you. This bit is fine, but it then goes on to say that if you cash in the bonds before 10 years, you get taxed again, at your marginal tax rate. This doesn’t make sense as it seems you effectively get taxed twice. What am I missing here?
My third question is: are “bonds” and “investment bonds” the same or different things? The reason I think they could be different – when I look at buying bonds and read up on how to buy them on ASX, nothing is mentioned about these so-called tax benefits. Even articles from the ATO on bonds do NOT mention this, in fact the ATO explicitly state that you will get taxed at your marginal tax rate. However, when I read up elsewhere (not through ATO), I noticed the phrase “investment bonds” was used to describe this tax benefit. It sounds like it is some kind of fund where you do not buy the bonds yourself on the ASX but it’s more that someone or some company manages a fund for you and you just invest money into this fund. Can anyone clear up my confusion on this point or point to the correct ATO documentation? Are bonds and investment bonds different?
Thanks,
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