Education Bonds – a tax-effective way to invest in your children's education

The ‘Planning for Education Index’ estimates that the national average cost for primary and secondary school for a child born in 2019 to attend a government school is $78,232, independent school is $351,684 and $148,016 for a Catholic school. This can be a significant expense on a family budget.   

Investing in an Education Bond can be a tax-effective way to save for a child’s education. It works as a ‘scholarship plan’ under Australian Tax Law that allows the bond administrator to obtain a tax deduction which will be passed on to the investor when you withdraw earnings to pay for the education costs.   

The investor can claim a wide range of education expenses from an education bond , such as:   

• Tuition fees, including course fees, HELP debts, private tuition, and career training costs 

• Non-tuition fees, including costs for uniforms, books, materials, equipment, music lessons and instruments, sports equipment, school outing and travel expenses 

• Living allowance, including costs for living away from home, could currently withdraw up to $8,750 per calendar year without proof of expenditure 

• Education-related boarding costs, rent and other accommodation expenses   

You can start with a small amount and make regular contributions to an education bond to build savings. You could change the contribution amount any time to suits your needs.  

You could withdraw your contributions at any time for any purpose, including for non-education costs, however, tax may be payable on any earnings. Anyone including grandparents, relatives, or friends (above age 16) can contribute to the education bond. 

 

Reference: https://www.goodschools.com.au/insights/education-updates/the-future-costs-of-education