June 16, 2021

Taxation on assets owned by minors

Many of us want to help out our children financially and as the saying goes, the best time to start investing is yesterday.

However, it is important to consider if investing in a child’s name is really the best financial option. In most instances, ‘unearned’ income generated by an asset such as an investment portfolio in a minor’s name are taxed at ‘child tax rates’ to prevent tax avoidance. The table below shows the tax rates for passive or unearned income for minors:

Passive or Unearned IncomeTax Rates
$0-$416Nil
$417 – $1,307Nil + 66% of excess over $416
Over $1,30745% of the total amount of the total income that is not excepted income*

*Excepted income is that generated by employment or business income, Centrelink payments or from a deceased estate. Excepted income is taxed at adult Marginal Tax Rates.

If you are interested in finding out more about how you could structure an investment for a child, please contact one of our Advisers. We are here to help.

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