Tax question re: accounts for your kids

[giggles]

I hope someone can help me with this. I would usually ask my accountant but since we have moved we are trying to find a new one!

I have an ING acocunt open for Ava but in my name. Does the interest we receive on this get eaten up by tax?

Would it be better to find a dedicated childrens account open in her name with me as trustee?

If so, which accounts do you think are the best.

To me ING makes sense because there are no fees and great interest whereas my bank only offers an interest rate of 0.4% on their childrens account (terrible!) but if the interest is all taken in tax because it is under our name, it's pointless.

Your experience?

[sharvs]

From what I understand, any account that is soley in a childs name is except from tax. If the account is in your name, you still have to inform the ATO of interest earned & it will be taxed at the end of the financial year. If you fail to provide your tax file number, the governement will take 48% general witholding tax on any interest earned, as it is credited to your account.

You are right, it is a bit of a catch 22. Childrens accounts are usually low interest earning, whereas high interest earning accounts in the parents names are taxed. You may want to keep looking, the credit union i use to work for offered a 'savings direct account' which earns roughly 5.35% p.a. It is mainly an on-line account and it is possible to pay no fees at all. You can put it in your childs name therefore it isnt taxed. The trick is for yourself to be a signatory & not listed as a holder of the account.

Sharon

[giggles]

Thanks Sharon! Would you be able to PM me the name of the credit union you used to work for?

[ThomasMum]

Hi. Ask your old accountant I'm sure she/he doesn't mind to help you, but the advice I got from our accountant was if the interest is under a certain amount (less than $500 I think) and the account is legitimately for your kids (i.e you deposit only, never withdraw) then you don't need to declare it with your tax...

If you do open a bank account for a child and you're the signatory, then you need to get a TFN. Plus you'll also get hit with bank fees.

Thomas is with ING, but on a separate account number- under my name. IYKWIM

[maydr]

From what I understand, any account that is soley in a childs name is except from tax. If the account is in your name, you still have to inform the ATO of interest earned & it will be taxed at the end of the financial year. If you fail to provide your tax file number, the governement will take 48% general witholding tax on any interest earned, as it is credited to your account.


Sharon

im taking taxation at H&R Block, and this is exactly it is.:thumbsup: