Saving / bank account for baby

Viewing 10 posts - 1 through 10 (of 10 total)

boney bream
Participant
@boney-bream
Join Date: 2011
Post Count: 22
January 7, 2012 - 6:28 am
Hello, I was thinking about opening an account for our 4 month old daughter as a place to hide away some spare cash. What are the rules/difficulties in regards to interest earned ect. Can this be tax free up to say 50k??? Can anyone recommend an outstanding account to set up for our princess?
thanks
Mick C
Participant
@shape
Join Date: 2010
Post Count: 1,099
January 7, 2012 - 7:23 am
I dont think tax is payable for any of the kids/youth saving accounts….
Regards
Michael
Mick C | Shape Home Loans
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Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
January 7, 2012 - 7:27 am
Kids can only earn around $416 in passive income and then they are taxed at penalty rates.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Mick C
Participant
@shape
Join Date: 2010
Post Count: 1,099
January 7, 2012 - 7:34 am
Terryw wrote:
Kids can only earn around $416 in passive income and then they are taxed at penalty rates.
dame…didn’t know that- that sort of sucks…$416 is nothing
Mick C | Shape Home Loans
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Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
January 7, 2012 - 7:37 am
Otherwise everyone would be saving tax by putting stuff in the names of their kids.
A few years ago it was up to $2,666 with the low income tax rebate, but they scrapped that.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Mick C
Participant
@shape
Join Date: 2010
Post Count: 1,099
January 7, 2012 - 7:44 am
yea i could see that loophole happening.
But most kids online savers are like 1% if that….so didn’t see much benefit using the loophole if the rate of return is so low.
Mick C | Shape Home Loans
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Paullie
Member
@paullie
Join Date: 2009
Post Count: 217
January 7, 2012 - 7:58 am
I scrapped my kids online savers a year ago. Now I place their funds in our offset and keep a record of their savings.
boney bream
Participant
@boney-bream
Join Date: 2011
Post Count: 22
January 7, 2012 - 8:04 am
Thanks for your replies. So, if the account was 4% interest I can only put in about 10k before the interest will be too high.
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
January 7, 2012 - 9:19 am
The main problem was people distributing income from discretionary trusts to children.
Imagine before a family with 10 kids = $26,660 in tax free income each year.
see the rates herer
http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/20046.htm&page=5&H5
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
January 7, 2012 - 9:26 am
Children could have earned up to $3,334 in the 2010-11 income year with no tax
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