Gifts of money to children.

[~ Mylitta ~]

In response to the OP questions... I think it's ok for the giver to state their preference, but ultimately it's up to the parents or the child (if they are old enough). I'll admit that if money is given to my kids (who are 9mths, 24mths and 3years) I tend to just put it towards nice things that I would buy for them anyway. For example, some nice new clothes, or some Montessori activities, or craft supplies etc... I figure it's still for them and they get enjoyment out of it, so it's win-win

[Butterfly Dawn]

The kids get money at Chinese new year from all hubbys family. I would like to save at least half. This year they are old enough to not want to hand over the red pockets so we'll let them choose a toy or something. Depending on our situation we have used money to pay kindy fees (which are expensive here).
Now the kids are older I want to open bank acc for them. Then if people - the inlaws or my mum want to give money for that they can transfer it straight in.
I think zoo etc memberships are a great idea

[misty]

I'd put it in the bank, and then let them get it back out to spend
It's not up to them how the money in the account gets used.

[Muppity]

I'm going slightly off topic, but the kids accounts would have to have enough money in them that they are generating over $18,200 a year (each) before they even start to pay tax (as it's treated the same as normal income). In a pretty standard savings account that means they would have to have around $400,000 before they pay anything in tax. If you are worried about paying a significant amount of tax they would have to have a lot more than that in their accounts. If they are lucky enough to have that much then that's fantastic and I'd be giving MIL a pat on the back hehehe.

Actually that's not right.

Kids can only earn a small amount before they are taxed at the highest rate to stop people hiding their incomes in their kids names.

I forget the actual figures but it is something like a maximum of about $3000 in interest a year before they pay tax taking into account the low income earners rebate. Mind you - in an account earning 6% that is still $50k that you need in there before it becomes an issue.

[Astrid]

Here is the ATO info on tax on children's accounts:
http://www.ato.gov.au/individuals/co....htm&page=2&H2

ATO info on who's interest income it is:
http://www.ato.gov.au/content/11900.htm

Chances are they would classify the interest as being mine, and therefore I would pay tax on it (no way am I doing that)
If they classify is as the girl's accounts and therefore their interest, it only takes interest of $420 and then I have to get them a TFN. Otherwise they will be taxed. Fine when they are of an age to work and therefore will need a TFN, but don't want to mess around with that yet.

Knowing how the account is handled and that the kids have no say at the moment in how they money is used (heck I don't even have a say ) that ATO will 99% class it under me. In that case I will put the money in my mortgage and avoid the interest income and the tax.

[~ Mylitta ~]

Ah yes, you are correct. I was reading something for kids over 16 or 18. But for kids under that age they get taxed a huge amount if they earn over $3330 a year. Like 66% on the whole amount! I guess its's fair enough.

If a kids bank account is earning quite a bit it's better to claim it as the parents income (which they can do if they are a signatory on the account) because it'll get taxed at a lower percentage, assuming the parents aren't already in the 66% bracket

[Astrid]

It is not just that tax though, there is FTB and CCB which are all affected by extra parental income.
Also any financial advice out there says not to have a savings accounts earning interest and paying tax, when that money could be saving you mortgage interest

[Cherished]

I'd start buying your kids a silver coin collection from the Perth Mint. Precious metals traditionally hold their value over the years and in most cases will increase. We asked all the grand parents to buy our DS silver coins if they were tempted to give him money... but none of them have yet! To answer the OP's question I think that if the kids are young then it's up to the parents in the end to choose what to buy the child or if they put it in a bank for down the track. As kids we were given money when we were older (maybe from the age of 10) and we were able to do what we wanted with it understanding that once it's gone it's gone, we could either save it and buy something good/more expensive that we were wanting or we could spend it on smaller less valuable things. This was fantastic, everyone has their own nature, my brother spent all of his money all the time, I saved mine, and saved, it.... and saved it! My sister spent hers too, I'm pretty sure we are all still like that now lol