How do investment bonds for kids look now with the CGT discount gone?
I have about $25,000 earmarked for my kids house deposit, it's currently in DHHF in their name+TFN, the plan was to transfer it to them at 18 and sell down between 18-20 to utilise their tax free threshold.
Holding it under the old system, it was 47% on dividends, but CGT disposal would have been 0-22% depending on their marginal tax rate at disposal (likely 0% or closer to). Now that it's 30% minimum on CGT disposal taxes, that changes things a bit, especially since investment bonds have a flat 30% tax for both dividends and CGT.
I would appreciate if anyone could help me reassess something like Gen Lifes Child investment bonds product wrapping Vanguard all growth fund.
**Downsides:**
- Additional fee of 0.40% - not inconsiderable
- Lack of flexibility in adding lump sum/windfalls
- Lower taxes on dividends
- Unable to make use of bringing forward capital gains (I think)
**Upsides:**
- My kid can't touch until 25 if I specify
- No need for them to handle taxes on disposal when they need to claim
- No yearly annual tax return admin for me
- Asset protection
- Lower taxes for dividends - 30% vs 47%
Is there anything I'm missing? Wrong assumptions?