Category Archives: Tax Resources

 

 

Income from a child’s investment

 

It is a generous act for a parent or aunt or uncle to start a savings account for their kids or a new addition to the next generation. It is uncommon among the warm and generous emotions that accompany giving such a gift to the newly arrived family member, to factor in the taxation obligations that may eventually come along due to this generosity.

 

A young child may not be able to use the ATM or see over the counter at the bank, but they can certainly have bank accounts. Naturally it is a child’s guardian who will manage their financial matters, and therefore a parent may operate a savings account on behalf of a child.

 

For taxation however, while the account may be in the child’s name and the funds in that account are the property of that child, the underlying legal principle that prevails is that investment income (in this case, the bank account’s interest) is assessable to the person who beneficially owns the money (and not necessarily who legally owns it).

 

The tax rules in operation here are not limited to children’s saving accounts, but it is a scenario that is useful in describing the principles at work. In fact, the Taxation Commissioner has recently issued a Tax Determination (TD 2017/11) that consolidates previous rulings and determinations in relation to not just children’s savings accounts but also monetary gifts to a child, joint bank accounts, and joint signatories to a bank account.

 

In each situation, it has been determined that interest income on a bank account is assessable to the person or persons who beneficially own the money in the account.

 

Tax rates for minors

 

The ATO and other government agencies determine a “minor” to be those under the age of 18.

 

For minors, the tax free threshold is a mere $416. Between $417 and $1,307 the rate is set at 68% (66% after June 30, 2017, when the Temporary Budget Repair levy expires). After $1,308, the top (adult) marginal rate applies.

 

Contact Expert Tax on 0449 952 855 for further assistance.

 

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March 2017 Quarter BAS Reminder: Quarterly BAS lodgments are due on 28 April.

 

It is BAS time again already!
Attention – Business Owners.
If you are registered for Goods and Services Tax (GST), then March 2017 Business Activity Statement (BAS) is due by 28th April 2017.

 

The March 2017 quarter BAS covers the months of January, February and March 2017.
Please note failure to lodge on time penalty may apply if BAS returns are not lodged by the due date.
Call us on 0449 952 855 to book an appointment for lodgment of your BAS Return. You can also get in touch with us by sending your query via our website – www.expert-tax.com.au or email us at info@expert-tax.com.au.

 

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