I stumbled across Australian Unity’s 10Invest product and immediately thought about my son and how much this could help him in 10 years’ time. I liked it because you are incentivised to contribute regular amounts and not to withdraw it. If I can put a little bit away each month for my son, I’m hoping it will give him a small kick-start to get into the housing market when he needs it.”
Natalie, 10Invest Customer (source: Our Impact 2023 Report)
Investing through 10Invest can offer tax benefits that can simplify your admin come tax time. Along with regular contributions, you can harness the power of compounding investment returns to build wealth for your child’s future so you can focus on all the other challenges parenthood brings.
Start small, grow big: In the blink of an eye, what begins as a modest investment can help set up your child’s future.
Evie’s mum inherited some money from her grandmother and wants to invest for her daughter’s first house deposit. Her own parents helped her out with a deposit, and she would love to do the same for Evie.
With an initial deposit of $20,000 and a direct debit each fortnight for $200, after ten years Evie’s mum was able to help her out with $100,000 as a tax-free lump sum towards her first home.
Note: This information is general in nature. Please consult your tax professional for advice specific to your situation.
10-year rule:
The 10-year rule governs how withdrawals from your investment are taxed.
You can withdraw after 10 years with no personal income tax to pay (10Invest pays tax on your earnings at a rate of 30% on your behalf) subject to the 125% rule.
However, if you withdraw within the first 10 years, income tax is payable on your investment earnings. The assessable amount will vary depending on when you make withdrawals within the 10 years.
125% rule:
You can make additional contributions over the life of your investment in 10Invest.
During the first year there is no limit to the amount you can contribute. The value of investing as much as possible during the first year is that you can contribute more in subsequent years.
Each following year, your contribution should not exceed 125% of the previous year. If you exceed 125% in any year, the start date of the 10-year rule will reset to the financial year of excess contributions.
Key points to remember:
You can invest on behalf of a child between the ages of 1 to 16 while retaining full control of the investment.
It can then be transferred to the nominated child at a vesting age between 10-25 years that you choose. The policy seamlessly transfers to them, preserving the 10-year tax benefits.
