What are the passive investment opportunities available in Australia?

What are the passive investment opportunities available in Australia? The most popular choices appear to be rental income from investment properties or interest income from large stable financial institutions such as the big 4 banks.

I have received some enquiries from some of my friends recently regarding the same question. They are from overseas and looking for investment opportunities in Australia. They are not interested in the Australian stock market but are looking for stable recurring passive income. Although the interest rate on term deposit available from the local big 4 banks may be more attractive than those available from the overseas banks, but at 3%p.a. -4%p.a. it barely looks exciting. On the other hand, they don’t want to put all eggs into one basket by putting all money into 1 single investment property.

Investing in high quality mortgage funds can be a viable alternative. Mortgage funds typically offer a much higher interest rate than the big 4 banks. In addition, overseas investors potentially enjoy a better tax treatment than local investors when it comes to interest income.

For example, the Australian Taxation Office may impose a 10% withholding tax on interest income derived by an overseas investor, but it may impose up to 47% tax on the same income derived by an Australian investor.

This is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.