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Remiii(Newbie)Newbie
16 Nov 2024

Hi everyone, I am currently living in Singapore and would like to know if an investment-linked product offered by a Singapore-based life insurer qualifies as an insurance bond or investment bond under Australian tax law.


The product primarily serves as an investment vehicle, with an element of insurance, and includes the following features:

  • Investment growth is tied to underlying assets (e.g., funds or shares).
  • A death benefit equivalent to 105% of the investment value.
  • Flexibility for policyholders to make withdrawals after a specified period or request for monthly payout for retirement.

Would such a product be classified as an insurance bond under Australian tax law, and would the 10-year rule for tax-free withdrawals apply?


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1 replies
205 views
1 replies

Most helpful response

Most helpful reply

AriATO(Community Support)Community Support
19 Nov 2024

Hi @Remiii


An insurance/investment bond sounds the same.

If you want to know the tax implications of your particular bonds you'll need specific advice from us.


Here's some general info in the meantime -

Insurance bonds may be advertised under various names and you'll need to look at the terms and conditions of each product such as the Product Disclosure Statement (PDS).


Insurance bond earnings are taxed at 30 per cent and are paid by the insurance company. 


You (the insurance bond policyholder) don't have to declare the earnings on your personal tax return unless a withdrawal is made within the first 10 years of the bond being taken out.


Withdrawals within the 10-year period may attract some personal income tax for policyholders. 


Generally, if you maintain the Insurance Bond for 10 years then the original amount plus accumulated income net of tax may be withdrawn free of CGT or income tax, subject to satisfying the 125% rule (where each years contributions don't exceed 125% of the previous years contributions).


Check out further info about life insurance companies and friendly society bonuses.


All replies

Most helpful reply

AriATO(Community Support)Community Support
19 Nov 2024

Hi @Remiii


An insurance/investment bond sounds the same.

If you want to know the tax implications of your particular bonds you'll need specific advice from us.


Here's some general info in the meantime -

Insurance bonds may be advertised under various names and you'll need to look at the terms and conditions of each product such as the Product Disclosure Statement (PDS).


Insurance bond earnings are taxed at 30 per cent and are paid by the insurance company. 


You (the insurance bond policyholder) don't have to declare the earnings on your personal tax return unless a withdrawal is made within the first 10 years of the bond being taken out.


Withdrawals within the 10-year period may attract some personal income tax for policyholders. 


Generally, if you maintain the Insurance Bond for 10 years then the original amount plus accumulated income net of tax may be withdrawn free of CGT or income tax, subject to satisfying the 125% rule (where each years contributions don't exceed 125% of the previous years contributions).


Check out further info about life insurance companies and friendly society bonuses.


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How do I know my policy is an insurance bond? | ATO Community