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Education Investment Fund

The advantages of an Education Investment Fund include:

  • S. Baker & Co Pty LtdAn education investment fund can be established by parents, grandparents, godparents, uncles, aunts or any person who wants to contribute towards the education of someone they care about
  • Provide a child or grandchild with a helping hand at the start of their adult life.
  • Ownership of the plan remains with the investor (person who contributed the funds).
  • Ability to appoint a new student, i.e. if your child chooses not to continue through to university or TAFE, you can appoint another child.
  • Invest for future education expenses in a tax effective manner.
  • Tax-free access to your own contributions (your money).
  • When investment earnings are withdrawn to meet education expenses, the withdrawal qualifies for a special tax benefit, which is included in the withdrawal proceeds.
  • The plan can be used to pay all education expenses, which may give you access to early payment discounts offered by many institutions. In addition, an extensive range of approved education costs are permitted.
  • An education plan can alleviate cash flow burden with the use of regular monthly payments. Additional lump sum payments can be made at anytime.
  • The ability to withdraw from contributions and/or investment earnings.
  • No annual tax return obligations for you or your nominated student, while your investment remains within the Fund.
  • Education withdrawals are managed in a tax effective manner to minimise any potential tax liability.
  • Investment earnings are taxed at a maximum 30% within the Fund.
  • Unlike traditional investment bonds an Education Investment Fund maximises the drawdown of funds through the use of the Investor Earnings and Education Tax Benefit, then Capital contributions. Only once this is fully utilised will the Fund draw down income where this is classed as taxable income in the hands of the Fund owner.
  • Market Linked Investment – select from 19 investment portfolios, from seven of Australia’s leading fund managers, with varying levels of risk ranging from Cash/Capital Stable to Shares/High Growth.
  • Funds are not locked away - you are able to access the funds at any time, providing you with additional flexibility.
  • An optional plan guardian feature is available to provide greater certainty about who will look after the education needs of your children should you die or become intellectually disabled before your nominated student has completed their education.
  • You can nominate one or more beneficiaries who will automatically receive any remaining plan proceeds should your nominated student die after your own death - these are paid directly to the nominated beneficiary tax-free.

If you would like to know more, click here.

This article is not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this article. All information is subject to change without notice. We and each party providing material displayed in this article disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of the information or material in this article. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.

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