Best Savings Account Option for Kids 15+ ?

hazzad on 04/07/2022 - 11:45

Hi all.

Currently have savings accounts for Great Southern bank for both kids. Balance is over 5k so have also had accounts with Bankwest to overflow to earn whatever interest they could. bankwest have advised that the 15 year old is no longer elligable for the Kids Bonus Saver account. So looking for alternatives we could use to make the overflow over 5k at GSB work for them. Is there any other bank out there offering a account with reasonable interest for kids 15+? have searched a few other similar threads but GSB seems to be one of the best options? Want to avoid the majors.

Any advice appreciated.

Financial Bank Account Savings Account

Comments

  • ChunkyToast on 04/07/2022 - 12:28

    If you have a mortgage then the best savings rate for them will be in your offset account.

    • hazzad on 04/07/2022 - 12:35

      Yeah we do and have thought about that but i feel guilty depriving them of the interest. I mean i guess i can pay them a nominal interest rate per month but that would somewhat negate the point of using it in the offset.

      • ChunkyToast on 04/07/2022 - 12:52

        You would be paying them interest that is tax free as you would just be transferring it to them as allowance.
        Interest earned is taxable but interest saved on your offset account is not so immediately worth more to both you and the kids.

        • hazzad on 04/07/2022 - 13:06

          So am i right in assuming that as of 15 they re now liable to accrue a tax debt? That is do they need to do a tax return(though they have no job so their only income would be via interest earnt)?

          • jv on 04/07/2022 - 14:19

            @hazzad:

            So am i right in assuming that as of 15 they re now liable to accrue a tax debt?

            yes…

            https://www.ato.gov.au/individuals/income-and-deductions/in-…

            Table: Tax rates for residents who are under 18
            Income

            Tax rates for 2020–21 income year
            $0 – $416 Nil
            $417 – $1,307 Nil plus 66% of the excess over $416
            Over $1,307 45% of the total amount of income that is not excepted income

            • hazzad on 04/07/2022 - 14:38

              @jv: Am i reading this right that they pay .66 in the dollar for income over 417-1307?

              • jv on 04/07/2022 - 15:11

                @hazzad: Yep.

                They may be exempt if they are employed though.

                It was done I believe to stop tax avoidance by the parents by investing money in the kid's names….

                • racer1234 on 04/07/2022 - 15:41

                  @jv: Employement income is exempt and taxed at more normal rates but interest is taxed at the above rates. With no deductions allowed etc for interest income.

                • hazzad on 04/07/2022 - 19:23
                  +1

                  @jv: They dont get anymore than a few hundred in interest a year so probably doesnt matter at this point. Have to talk to the wife but thinking the offset option and paying the kids a annual "allowance" may be the way to go.

                  • ChunkyToast on 04/07/2022 - 20:07

                    @hazzad: That's the way, was doing that when I was growing up but I didn't take all the interest. I let them keep a %.

                    Ran a spreadsheet with interest calcs etc haha

    • Trishool on 04/07/2022 - 20:04

      What if you did the same thing but in a redraw account? Same thing or not?

      • ChunkyToast on 04/07/2022 - 20:08

        Redraw has tax consequences on investment property. If it is your PPOR then not an issue.

        • Trishool on 04/07/2022 - 20:08

          Yep its my PPOR, thanks for your response :)

  • racer1234 on 04/07/2022 - 15:39
    +1

    myBOQ is paying 3% for kids at moment. They waive the regular deposit requirements and fees etc for under 18's.

    • CrazyBargainCatcher on 04/07/2022 - 16:36

      Should add a 50k limit and a 14-35 age "limit"

      • jv on 04/07/2022 - 19:25
        -1

        Should add a 50k limit

        That rules my kids out… 😞

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