Tax-effective Strategy C2 Gateway Series - 112, 120 & 124, 125 & 126
WHOLESALE INVESTORS ONLY (S708)
***GENERAL ADVICE ONLY***
Date: 24/02/2025
Understanding the C2 Gateway Series
High-income investors frequently encounter substantial tax obligations that diminish overall portfolio efficiency. The C2 Gateway Series is a structured financial product designed to provide both tax optimization and leveraged market exposure, making it a strategic tool for wholesale, professional, and sophisticated investors aiming to enhance capital deployment while managing tax liabilities.
Understanding the C2 Gateway Series
The C2 Gateway Series is an investment vehicle that allows investors to gain exposure to diversified financial indices through a Deferred Purchase Agreement (DPA). These units are linked to various market indices, offering the potential for capital growth while utilizing a tax-effective strategy to maximize benefits.
The latest offerings in the C2 Gateway Series (112 to 120 & 124, 125, 126) provide:
- A structured tax strategy that enables high-income earners to offset taxable income.
- 100% Limited Recourse Loan, ensuring no additional downside risk beyond the initial investment.
Fixed Coupons payable over the investment term, with the potential for an additional performance-based coupons.
Annual Walk Away Option, allowing investors the flexibility to exit the investment at predetermined intervals.
How Does the Tax Effective Strategy Work?
The C2 Gateway Series offers an attractive tax deduction benefit for high-income earners. Here’s how it applies in a real-world scenario:
Case Study: Fred – A High-Income FIFO Worker
Fred earns $300,000 annually, placing him in the highest tax bracket where earnings above $190,000 are taxed at 47%. To minimize his tax liability, Fred first invests $18,369 in the C2 Gateway Series 112-120, a six-month product designed to provide an initial tax benefit and market exposure.
February 2025: Fred enters Series 112-120, securing a $100,000 tax deduction for the FY25 tax year, resulting in a $47,000 tax refund.
August 2025: At maturity, Fred rolls his exposure into C2 Gateway Series 124, 125, and 126, allowing him to extend his leveraged market exposure while maintaining tax efficiency.
2025/2026 Tax Year: Fred claims additional deductions associated with interest payments, further reducing taxable income.
2026/2027 Tax Year: Fred pays $6,719 in interest.
2027/2028 Tax Year: Fred pays $10,749, achieving a net positive return even in a low-market performance scenario.
Key Features & Benefits
Tax Efficiency: Ability to offset taxable income through structured interest deductions.
100% Leverage: Investors can access the full market exposure with a Limited Recourse Loan.
Fixed & Performance Coupons: Predictable returns with potential upside from market-linked performance.
Annual Walk Away Option: Provides investment flexibility without additional financial commitment.
No Margin Calls: Unlike traditional leveraged investments, there are no unexpected capital calls.
Superannuation (SMSF) Eligibility: Suitable for self-managed super funds (excluding interest loans).
Potential Risks
While the C2 Gateway Series offers substantial benefits, investors should consider potential risks:
Market underperformance may vary returns.
Interest rates on loans impact the overall cost of investment.
Who Should Consider the C2 Gateway Series?
This investment is best suited for:
High-income earners looking for tax-effective investment strategies.
Investors seeking leveraged exposure to global financial markets.
SMSF investors wanting to enhance portfolio returns.
Wholesale and professional investors aiming to diversify their holdings.
Interested?
Detailed Walkthrough
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Disclaimer: The recommendation given is general advice only. It does not take into account your personal objectives, financial situation, or specific needs. This information should not be your sole resource when making such decisions. We strongly recommend you to seek the advice of financial, taxation, and legal professionals before finalising any investment decisions.