Buying shares for minors

[Stan 101]

Hi all,

I've been considering buying a parcel of shares for my nephew and neice (13 and 10 respectively) for a little nest egg to get them started in their adult life.
I know I could just buy them in my name now and sell on their 18th birthday, but I would prefer to give them the shares in their name to see how the dividend reinvestment has made a difference to their captial etc..

Can I do this and how wojuld I go about making this happen?

Are there any tax issues?


regards,

 

[money tree]

https://www.aussiestockforums.com/forums/showpost.php?p=23382&postcount=8

 

[bullmarket]

Hi Stan 101

I went through this exercise last year and I found the easiest way for me was to ask my CHESS sponsor (Commsec) to set up a new account for me, which had to be in my name but in my application for a new account I added a designation to the account which appeared under my name on the account and also appears on all contract notes, CHESS holding statements and all correspondence relating to the new account. The designation can be the name(s) of minors, a trust account name etc etc.

So essentially all shares bought with this new 'designated' account are in your name for tax and ownership purposes. The minor's name will appear on the CHESS holding statements as a designation under your name. You are still the legal owner of the shares and so the minor cannot sell or do anything with them without you acting on their behalf. Any dividends you receive will be paid to you via your usual method and taxed as per usual. You can pass on the div payments to the minors however you like or reinvest them.

The other alternative is to buy shares directly in the minor's name but that is too messy imo. In this case the minor will be the legal owner for tax purposes and so will still have to apply for a tax file number and submit a tax return, especially if dividends are received. The tax on minor's earnings is horrendous from memory.

The best thing to do is speak to your CHESS sponsor and see what is best for you. I ended up setting up a new designated account and keep everything in my name for the time being.

Good Luck

bullmarket

 

[Stan 101]

thanks for the help... I'll look into it...


Cheers,