Tax effective way of saving for kids

Viewing 9 posts - 1 through 9 (of 9 total)

Mayuran
Member
@mayuran
Join Date: 2010
Post Count: 20
June 30, 2011 - 9:29 am
Hi All
i have been putting $250 per month on bankwest kids bonus account (10%) , after a quick look at the ATO website looks like i will have to pay the tax on the interest they earn … can any one confirm?
Also any suggestions on best tax effective way of saving money for kids?
thankx
Mayuran
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
June 30, 2011 - 10:07 am
Kids can earn $3333 in interest with no tax this financial year, and only $416 next year.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Rowan MCcole
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@rowan-mccole
Join Date: 2010
Post Count: 7
June 30, 2011 - 10:23 am
Even without a tax file number ?
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
June 30, 2011 - 10:25 am
Yes
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Mayuran
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@mayuran
Join Date: 2010
Post Count: 20
June 30, 2011 - 11:24 am
Thanks Terry !
Whats the best way of avoiding next year? because their accounts going to earn even more interest next year…
Mayuran
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
June 30, 2011 - 11:32 am
hi Mayuran
Avoid paying paying extra tax?
I would imagine you could set up a bank account as trustee for your kids and place an amount of money that will make the interest come in under $416. Any other cash you could hold in your own account on their behalf.
I am not an accountant and haven't really considered this before so I am not sure of the finer details!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
itsandrew
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@itsandrew
Join Date: 2007
Post Count: 294
July 4, 2011 - 12:10 am
Hi Terry,
I'd heard the change in tax rates only applied to trust distributions but is it for income across the board?
Andrew
itsandrew
Go as far as you can see and you will see further.
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
July 4, 2011 - 12:23 am
Hi Andrew
Its applies to most unearned income of children
see http://www.ato.gov.au/content/00282114.htm
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
itsandrew
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@itsandrew
Join Date: 2007
Post Count: 294
July 4, 2011 - 1:12 am
Cheers Terry.
itsandrew
Go as far as you can see and you will see further.