Independent schooling can cost up to about $400,000 per child, paid from after tax income. Felix Taing and Affluens' senior financial planner Aaron Phuong unpack a wealth management strategy for Australian doctors: investment bonds, where earnings are taxed at a maximum of 30% and withdrawals are tax paid after ten years. They cover the 125% contribution rule, the education bond's extra benefit and its catch, projections for a one year old, and the question every parent needs answered first: when does the ten year clock need to start?

Key Takeaways

• Put a Number on It: Independent schooling can run to about $400,000 per child across 13 years, paid from after tax income. A figure that size deserves a plan rather than a hope.
• A Bond Is a Tax Wrapper: Earnings inside an investment bond are taxed at a maximum of 30%, against a 47% marginal rate. After ten years, withdrawals come out tax paid, with no capital gains tax to settle.
• The Education Bond Has a Catch: An education bond is an investment bond with an extra 30% tax benefit on money used for education. What comes out is taxed in the child's name, so the child's age matters and your accountant belongs in the conversation.
• Mind the 125% Rule: Each year you can contribute up to 125% of what you put in the year before. Scale contributions down and the cap resets from the lower figure, which slows how quickly you can build back up.
• Work Backwards From the First Fee: The ten year clock should finish when the money is first needed. For private high school that means starting around your child's first birthday; for primary school, possibly before they are born.
• The Plan Moves With Your Family: You can nominate a transfer to your child at a set age, redirect the balance to yourself, or open further bonds as savings allow. A selective school offer or a change of heart does not strand the money.

Notable Quotes

1. "So essentially it's a way to invest and save tax." — Aaron Phuong
2. "But it's really flexible in that you can change the rules anytime. Just the same way you can can update your will at any point in time and say change where your assets go." — Aaron Phuong
3. "So the question, the answer to that is it depends when you're going to need the money." — Aaron Phuong
4. "So it's a fully taxpaid after ten years and that's the main attraction." — Aaron Phuong
5. "you've actually got to start before they're even born, right? Because the wait list is that long." — Felix Taing
6. "So it's flexible which is great because you know what they might actually make it to that selective school" — Felix Taing

Most doctors have years of equity sitting in their home loan and never restructure it. Debt recycling turns that non deductible mortgage into tax deductible investment debt, but it isn't for everyone. Property adviser Felix Taing and Affluens360 Managing Director Abraham Aguilan unpack how it works, what falling markets, rising rates and a fellowship year can do to it, the cash flow of a $500,000 worked example, and the three mistakes that undo it. A lending and wealth strategy conversation that answers one question: is it right for you?

• Debt Recycling Is a Swap, Not a Windfall: You borrow to buy income producing assets, so the interest becomes deductible while your home loan interest never was. Investing cash straight from your offset account doesn't do this, and it quietly raises the interest on your home loan.
• Start With What the Money Is For: Before the tax benefit, decide what you need this income to do for your family and your future. A strategy that suits a colleague may not suit your cash flow, your commitments or your comfort with uncertainty.
• Your Career Shapes the Risk: The real danger is a perfect storm: markets fall, rates rise and income dips for a fellowship or parental leave at the same time. Being forced to sell then can leave you owing more than you started with.
• Expect the Early Years to Cost You: In Abe's $500,000 example, at 6.2% interest and a 47% marginal rate with steady returns assumed, year one finishes about $2,000 out of pocket after tax and turns positive around year five. A falling market only becomes a real loss when you sell, so your time horizon is the strategy.
• The Same Logic Works for Property: Recycled equity can fund a deposit on a residential or commercial investment property. Felix is seeing commercial assets suit some clients, where a strong net yield can cover the loan.
• Set It Up Right From Day One: Split the loans, keep investment and personal accounts separate, don't redraw until the money is going into an income producing asset, and keep documentation your accountant can follow. Get your accountant, planner and broker in the same room before you start.

1. "So just because you hear it doesn't mean it's right for you." — Abe Aguilan
2. "Selling at the wrong time is the worst thing you can do because you're probably going to end up with bigger debt than what you had actually started with." — Abe Aguilan
3. "Again, it just comes back to, is it the right decision for you? And not just doing it for the sake of tax." — Abe Aguilan
4. "If there is no loan there is no debt to recycle." — Abe Aguilan
5. "And I think that's the importance of the right documentation, but also having the right structure from day one where the loans are completely split." — Felix Taing
6. "How much time do you have and have we got the time to ride the waves of the market and longevity of our investments?" — Abe Aguilan

The May Budget's 30% minimum tax on discretionary trusts starts on 1 July 2028, and for doctors running a family trust with a bucket company, the maths is about to change. Felix Taing sits down with Mohan Sathyanarayana, Head of Tax and Business Advisory at Affluens360, to unpack why these structures worked so well, who loses under the new rules, and why bucket companies take the biggest hit. It's a tax conversation built around preparation, not panic, and it lands on one question: what does your trust deed actually allow?

Key Takeaways

• Prepare Now, Don't Panic: The rules are still being finalised, so there's breathing room, but the clock is running. Use the time to get your structure reviewed instead of rushing to your accountant at the deadline.
• Trustee Discretion Was the Whole Point: A family trust let the trustee decide at 30 June who received the income, so earnings could go to family members on lower rates and the surplus to a bucket company taxed at 25 to 30%. That flexibility is exactly what the new tax targets.
• Bucket Companies Take the Biggest Hit: From 1 July 2028 the trust pays 30% before it distributes. Individuals get a credit for that tax, although anyone on a rate below 30% can't recover the difference. A bucket company gets no credit at all.
• Read Your Trust Deed First: Most deeds sit in a safe and never get read. Before you restructure, or ask AI how to, have your accountant confirm what your deed allows, who it names as beneficiaries and who controls the trust.
• Build Every Entity With an Exit in Mind: Structures exist for asset protection and income flow as much as tax. Know which entity holds what, and whether you could close one business without unwinding the rest and handing over capital gains you didn't need to pay.
• Confusion Is Your Trigger: If you can't explain your own structure, or your adviser's explanation doesn't make sense, it's time for a review. Know what each entity is worth, and have the conversation with your accountant when the rules land.

Notable Quotes

1. "I think we need to be a rocket scientist, especially the changes that the budget has come in." — Mohan Sathyanarayana
2. "The discretion was up to the trustee to make that discretion call at the 30th of June. So that's the reason it was very, very famous with the accounting community." — Mohan Sathyanarayana
3. "What I've seen with a lot of clients, we give them a trust deed with 40 pages or 60 pages. They just lock it in a safe place and never look at it, right?" — Mohan Sathyanarayana
4. "Having the right advice and not just setting up a company just because someone said, okay, you should do that for tax benefits." — Felix Taing
5. "What I see is structuring is not tax minimization." — Mohan Sathyanarayana
6. "If you don't understand it or the advisor who is explaining it to you doesn't make any sense, it's time to change." — Mohan Sathyanarayana