Tax on child's savings account?

[poortrader]

Hi All,

Let say i have a child, and want to open up an ING interest savings account for him/her

i deposit $10K and then add a couple hundred a month into the account until the child is say 16yrs of age.

There is no tax to pay on the interest earned right?

 

[drsmith]

Re: Savings Account

Accounts in the name of children can earn a small amount of interest tax free but is then taxed at a punitive rate once the threshold is breached.

http://www.ato.gov.au/individuals/content.asp?doc=/content/11900.htm

This is to prevent Ma & Pa avoiding tax by income splitting.

 

[son of baglimit]

http://www.ato.gov.au/individuals/content.asp?doc=/content/11900.htm&page=4&H4

this page will answer your question a bit better.

of course its for 09 FY - changes to low income tax offset make the cutoff higher.

 

[drsmith]

http://www.ato.gov.au/individuals/content.asp?doc=/content/11900.htm&page=4&H4

Looking at that I was thinking Ma & Pa Pop'em Out might be able to get a $13335 deduction on children's income for, say, 5 kids.

The catch though is that the ATO will look sideways at anything like an unusually large birthday present.

http://www.ato.gov.au/individuals/content.asp?doc=/content/11900.htm&page=3&H3