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[Parents and Guardians of Kids] 4.75% P.a. Savings Account @ BankWest

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[Parents and Guardians of Kids] 4.75% P.a. Savings Account @ BankWest
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SomeGuyOnOzB on 08/06/2017 - 17:57 bankwest.com.au (362 clicks)
Last edited 09/06/2017 - 09:47

** update **
Some members mentioned an automatic sweep on anniversary, where more than a certain amount is swept out to another account every 12th or 13th month. I'm not sure if you can then sweep more money back near the end of the month (sacrificing bonus interest that month) to resume getting good interest for later months.

— original post

Are you a parent, guardian or adult signatory for a child (aged 15 years and under)?

You can open and operate a Bankwest kids saver account.
4.75% p.a. if the following conditions are met:
- Each month deposit between $25 and $250
- no withdrawals

Please read the requirements carefully as I only breezed through it.

Note Some members have pointed out, it's probably good to know the current tax specifications, about whether you might declare the interest as yours, maybe see a tax specialist, tax rate for children can be higher than for adults, interest from savings accounts for children might be declared as yours, etc

Some interesting reads here (though I'd have no idea if it was comprehensive as I'm not a tax specialist or anything):
- ATO says about savings accounts …
- also says about income

Financial Bank Account Bankwest Savings Account

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Bankwest
Bankwest

closed Comments

  • 51ngh on 08/06/2017 - 18:07
    +2

    PDS for this account: https://www.bankwest.com.au/content/dam/bankwest/documents/l…

    Also, you need two accounts. First you need to set-up a Children's Savings Account. Then you will setup a Kids Bonus Saver account, which will be linked to the savings account.

    I have my kids money in a Suncorp Kids Account. They pay 4.25%, but require a $20 deposit, as opposed to $25 with BWest.
    I reckon the BWest deal is better than Suncorp because
    1) It pays more interest.
    2) You are forced to transfer more money (hence more savings at the end of the year)

    OP: Please update the title to reflect the proper name: Kids Bonus Saver

    • Iwantthatbargain on 08/06/2017 - 18:42

      Who pays the tax on the interest income? Is it the parent?

    • ryann on 08/06/2017 - 18:55

      You may want to check rates with Suncorp. My kids' accounts dropped to 3.75% last year.

      1.5% base with 1.25% bonus if deposit $20 and no withdrawals that month.

      Pretty sure they didn't notify of the drop.

      • deeevan on 08/06/2017 - 20:35

        That only adds up to 2.75%, even worse than you thought?

        • ryann on 08/06/2017 - 22:54
          +1

          Me fail maths, that's unpossible.

          But yeah, it is worse. Stupid me and Stupid Suncorp.

  • BluBoy on 08/06/2017 - 18:10

    I THINK it is a max of $250 which can be paid into this account each month
    Anything over $250 will be swept into another (low interest) account.

    The interest on $250 inserted per month for a max of 12 months seems like more hassle than it's worth.

    • 51ngh on 08/06/2017 - 18:11

      Unless the kid is working, which other kid would transfer more than $250 a month !
      It is not meant to be used by adults as a high interest account !

      • BluBoy on 08/06/2017 - 18:12
        +7

        That's not how an ozbargainer is meant to think! :)

        • jv on 08/06/2017 - 18:41

          about half you interest will be going to tax…

    • get-innocuous on 08/06/2017 - 18:27
      +1

      Just have more children until you have enough savings accounts for the amount you want to save each month!

  • povertytrap on 08/06/2017 - 18:20

    I have one of these accounts for my kid, they are pretty good.

  • Hojupeter on 08/06/2017 - 18:34
    +5

    I have first option credit union kids accounts. Even better at 5.15% and only $5 deposit per month required. Win money magazine best account 4 years. However parent will need to become a member of the CU I think it cost me $1 way back to do so. Check it out https://www.firstoptioncu.com.au/2017-campaigns-kids-bonus-s…

    • SomeGuyOnOzB on 08/06/2017 - 19:34

      Post it as a deal? :)

    • sghetti on 10/06/2017 - 06:40

      5.15% only applies up to $5000. The portion over $5000 is only 1.40%.

      Still an excellent deal for a Kids Saver given the small amount of conditions for meet bonus interest criteria!

  • mehow on 08/06/2017 - 18:39

    what if my 3yo wants to invest $50K into it?

    • jv on 08/06/2017 - 18:40

      then they'll pay a lot of income tax… probably much more than you.

    • djkelly69 on 08/06/2017 - 18:45

      Your kid should find a more tax-effective investment, because the 66% tax once he earns over $416 in interest will be a killer (not certain on current numbers, but something like that).

      • jv on 08/06/2017 - 18:50

        I thought the highest tax rate was 49% ?

        • djkelly69 on 08/06/2017 - 19:42
          +2

          There is a special rate for kids savings to try and avoid people putting funds in their kids names. May not be that exact amount, I haven't looked at it for a few years now.

        • djkelly69 on 08/06/2017 - 21:21
          +1

          Table: Tax rates for residents who are under 18

          Income Tax rates for 2015–16 income year
          $0 – $416 = Nil
          $417 – $1,307 = Nil plus 68%* (66% plus 2%) of the excess over $416
          Over $1,307 = 47%* (45% plus 2%) of the total amount of income that is not excepted income

          source

          Note extra 2% 'temporary refund adjustment' will be gone from 1 July 2017.

        • jv on 08/06/2017 - 21:39

          @djkelly69:

          Table: Tax rates for residents who are under 18

          So if you leave school at 17 and get a job to support yourself, the government screws you.

        • djkelly69 on 08/06/2017 - 21:43
          +1

          @jv: Nah there are some exceptions, including if you are working full time (in which case you get the pay the normal adult rates).

      • SomeGuyOnOzB on 08/06/2017 - 19:18

        -> djkelly69

        I'm looking at the ATO site. Although the account is in the child's name and is a kids account, doesn't this say that you declare the interest as the parent or guardian's?

        https://www.ato.gov.au/Individuals/Investing/In-detail/Child…

        Who declares interest

        Who declares the interest depends on who owns or uses the funds of that account (no matter what type of account it is or the name of the account holder).

        You need to consider who:

        provides the money
decides how money is spent, regardless of who it is spent on.

        If you provide the money and spend it as you like, you must include the interest in your tax return.

        and then there's other stuff depending on trusts and more, which I haven't looked into

        • djkelly69 on 08/06/2017 - 19:41

          Short answer is that it depends on the circumstances. If treated by the parent/s as their funds, they pay the tax. If treated as genuine child's savings, the child pays (but has exemption up to $420).

    • 51ngh on 08/06/2017 - 19:05
      +1

      I'll adopt your 3yo

  • jv on 08/06/2017 - 18:40
    +3

    Make sure you are aware of the TAX implications.

    Interest over $120 for a child may be taxed at the highest rate and the bank might be required to keep withholding tax…

    • radnom on 08/06/2017 - 18:47

      thanks, i was wondering about this

      • jv on 08/06/2017 - 18:49

        Kids don't get the tax free threshold, so need to take that into account…

    • YLC on 09/06/2017 - 00:07

      Hi Jv, may I know where do you get the $120 figure? I thought the kids income threshold before the tax kicks in is $416? Thanks

      • jv on 09/06/2017 - 01:15

        where do you get the $120 figure?

        google

  • radnom on 08/06/2017 - 18:46

    Thank you.
    The sweep facility looks a little annoying:
    4.2 At the end of each anniversary date of the account opening we will transfer the balance of the account above $1.00 to the Children's Saver Account.

  • dynamike on 08/06/2017 - 20:08

    Tax kills this deal for anyone looking to save more than actual "pocket money"

    • djkelly69 on 08/06/2017 - 21:12

      Can have close to $10k before the tax will kick in for kids, so a bit more than pocket money.

      • dynamike on 08/06/2017 - 22:18

        check your facts

        • djkelly69 on 08/06/2017 - 22:37

          Well $8750 if you can get 4.75% on the whole amount, but that can be an issue with kid's accounts.

          Not sure what facts I am missing?

  • 31mop on 08/06/2017 - 21:32
    +4

    We have this account for our two kids. It's handy, but it's pretty annoying if I'm honest. It might be high interest, but when the money sweeps back every anniversary, the interest isn't as good as it seems. You can only earn the 4.75% on pretty much no more than about $3080. (12x $250 deposits plus the interest)

    So year 1 is good, year 2 and onwards, not so good as the $3k that rolled over on anniversary to the other account (about 1% interest) so on month 13 I got 1% on $2830 (3080 minus $250 deposit) and 4.75% on the $250 deposited in month 13.

    I hope all that makes sense.

    • radnom on 09/06/2017 - 10:46

      in month 1 of year 2, could you just transfer $250 from the children's saver into the kids bonus saver?
      edit: oh wait, i think that's what you did.

      • 31mop on 09/06/2017 - 18:43

        Yep. So 2% compounded over 20 years would probably yield more than this.

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