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Give your kids the start in life they deserve

You can use the Education Savings Plan to assist with pre-school, primary, secondary and many university and TAFE courses. The plan can also cover education for children with special needs and approved overseas courses, as well as mature-aged students.

You can withdraw tax-advantaged funds for education purposes, including HECS and HELP debts, course and tuition fees, student union fees, uniforms, books, travel expenses, and sporting and musical equipment and lessons.

Career training is also covered if the course or training is approved by Lifeplan. It can also cover education-related residential boarding costs, rent and other accommodation expenses incurred by students living away from home (full-time students living away from home can withdraw a tax-advantaged living allowance of $6,150 per year*). Course electives or the entire course attended in a Lifeplan approved foreign education institution may also be valid.

You can contribute up to a maximum of $405,000 per nominated child or student. Lifeplan reviews this limit annually and may increase it to reflect the growing cost of your children’s education.

Invest how it suits you

Once you set up your Education Savings Plan with an initial lump sum deposit (minimum $1,000), you can make contributions through a regular savings plan, or through additional lump sum contributions. You can increase or decrease your regular contributions without any fees or penalties.¹

Anyone over the age of 16 can open a plan, or contribute to an existing plan, for the children in their life. And you can access the money in the plan at any time and for any purpose, with no withdrawal fees.

Depending on your investment strategy and goals, you can choose from four investment options.² You can switch options at any time.

• Capital secure option: A diverse but relatively stable portfolio of cash and fixed interest investments.
• Balanced option: A more diversified portfolio that includes shares, property, fixed interest and cash assets.
• Diversified option: A higher risk, diversified portfolio that includes shares, property, fixed interest and cash assets.
• High growth option. A diversified portfolio of Australian and global shares.

Before you decide which investment option is right for you, make sure you understand factors such as risk and return, the importance of diversification and the characteristics of growth investments.

 The plan operates as a ‘scholarship plan’ under tax laws, which means it offers certain advantages not generally available through other savings and investment products. Earnings generated by the investment options are taxed at the corporate tax rate (which is currently 30%). However, Lifeplan can recover this tax if those earnings are used to pay eligible education expenses. The tax recovered by Lifeplan is referred to as the Education Tax Benefit. When you lodge a claim to pay education expenses by making a withdrawal from investment earnings, Lifeplan will automatically include the relevant amount of Education Tax Benefit in the amount paid to you. Including the Education Tax Benefit in these types of withdrawals means that you get to keep more of your investment.³

 

It could also be a good idea to seek professional advice from a financial planner. If you’d like advice on saving for your children’s education, you can use our online booking form to organise a no-obligation consultation.

 

• Important information
  *current as at 1/07/2011
  ¹ If you establish a regular savings plan, the minimum monthly contribution is $100 per investment option. A minimum of $500 per investment option applies for lump sum contributions.
  ² The information provided on each investment option is a suggested guide only and is not intended as investment advice. Please refer to the Product Disclosure Statement (PDF – 1MB) and consult your financial planner for more information.
  ³ For a student under 18, no tax will normally be payable as long as the sum of eligible education expenses withdrawn, plus investment income (from any source), is less than $416. If you want to withdraw more than this for education expenses for the nominated student, the first $416 comes from a combination of investment earnings and Education Tax Benefits (which isn’t charged tax provided the student has no other assessable investment income for the year). The remaining balance comes from capital on which no tax is payable either. When the nominated student turns 18, there is normally no tax liability, as long as the sum, of the education expense reimbursements from investment earnings and Education Tax Benefits, together with the student’s employment and investment income from all sources, falls below $16,000 in a financial year.
  For a student under 18, no tax will normally be payable as long as the sum of eligible education expenses withdrawn, plus investment income (from any source), is less than $416. If you want to withdraw more than this for education expenses for the nominated student, the first $416 comes from investment earnings (which isn’t charged tax provided the student has no other assessable investment income for the year). The remaining balance comes from capital on which no tax is payable either. When the nominated student turns 18, there is normally no tax liability, as long as the sum, of the education expense reimbursements, together with the student’s employment and investment income from all sources, falls below $16,000 in a financial year.

Education Savings Plan (the Plan) is issued and administered by Lifeplan Australia Friendly Society Limited ABN 78 087 649 492 AFSL 237989 (Lifeplan). The Commonwealth Bank of Australia markets and distributes the Plan but the Commonwealth Bank and its subsidiaries do not guarantee the Plan or any rights or obligations in respect of the Plan and are not issuing or underwriting the Plan. Lifeplan and the Commonwealth Bank and its subsidiaries do not guarantee the performance of any of the Plan's investment options or the repayment of contributions and investment returns by the Plan. Investments in the Plan are not deposits or other liabilities of the Commonwealth Bank or its subsidiaries and investment-type products are subject to investment risk, including possible delays in repayment and loss of investment returns and contributions invested. A Product Disclosure Statement (PDF – 1MB) for the Plan is available here or at any branch of the Commonwealth Bank. You should consider the PDS in making any decision about this product.

The information contained on this web page is of a factual nature only and is not intended to constitute financial product advice. It has been prepared by Commonwealth Financial Planning Limited without considering your individual objectives, financial situation or needs. You should consider its appropriateness in light of your circumstances and consider seeing professional advice relevant to your individual needs before making a decision based on this information. Commonwealth Financial Planners are Representatives or Authorised Representatives of Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139, a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.