Gift of shares for child

My friend and her young son (11 years old) are becoming New Australians this year, having secured citizenship after a difficult move from the Ukraine.

They have embraced Australia with enthusiasm and gratitude and, as a gift to the child on the occasion, I thought of purchasing a small quantity of iconic Australian shares, (around $250 value) for him to “set and forget” and use as he sees fit when he becomes 18.

Thing is, with no experience of shares other than those managed for me in my Super, it seems to involve TFN’s, high rates of tax on income and a palaver for his parents, which is obviously not what I want to do.

Is it possible to do this simply and without incurring additional work for his parents? If so, could anyone please recommend how to do this?

Thank you.

Comments

  • +4

    CommSec has a 'Minor Trust Account' which sounds exactly what you're after. Looked into it a while back but seemed complicated and gave up at the time.

    https://www.commsec.com.au/products/minor-trust-accounts.htm…

    An alternative is buying them 1g of gold bullion.

    https://www.abcbullion.com.au/store/gold/gabgt041g-abc-bulli…

  • +1

    Alternatively you could gift him a bucket of money for his 18th birthday. Zero admin for him and his parents.

    • +1

      Could hold the $250 in the bank and give the resultant incl interest less tax and inflation and fees at the 18th birthday = $100 or less

  • -7

    This isnt really what you asked for and will be an unpopular opinion AND ill likely get downvoted, but a crypto currency, like bitcoin stored on a paper wallet may be a profitable solution.
    Its not hard to do but you'd need to feel comfortble with the process or know someone who is.

    • OP wants iconic Australian investments to mark the occasion. Any Aussie cryptos come to mind ? Zac Coin perhaps.

  • +1

    $250 in a variety of shares is going to get chewed up in fees. Nice thought though.

  • +9

    Short answer "no".
    Long answer, still no, and $250 is a non-marketable parcel apart from the admin burden, high fees, tax issues etc.
    If you wanted a gift that is financial and celebrates Australia, maybe one of the commemorative silver coins put out by the Perth mint?

    • Definitely recommend a Perth Mint gold or silver coin or bar.

  • +1

    For $250 it’s not worth the admin hassle

    Buy the kid some bitcoin or a low mintage physical coin from a coin dealer

  • For an 11yo - giving $250 of chocolate gold coins would be well received and a photo of would be cherished forever.

  • +2

    Buying shares for a minor is an involved business. If it was your own child & the sum significant, then it’s worthwhile. If it’s for someone else’s child & the sum small, then avoid.
    The child has to apply for a TFN. The parents have to agree to be the trustees/admins for the shares with the child being the beneficiary.
    You’d need to set it up with a DRP to avoid annual tax liability.
    The child will need to submit a tax return every year (the parents would do this)
    At age 18 the shares would be transferred from the minor trust to the child (now an adult), with associated costs (current about $50 for each type of share).
    Sound complicated? Well it is, so avoid in your case.

    Buy something iconic? How about going to the Mint and getting some collectible coins or stamps?

    • You are generally correct, however there are a few ways around this which I will address in my post - e.g a tax return each year is NOT needed if you purchase the correct equity.

    • +2

      You’d need to set it up with a DRP to avoid annual tax liability.

      I don’t think that’s correct? You still need to declare dividends/distributions as income, regardless of whether or not they’re reinvested. Tax-wise it’s no different to just receiving cash and buying the additional shares yourself. Happy to be corrected.

      • I agree with this. DRP doesn’t avoid income tax on the dividend.

    • +1

      You’d need to set it up with a DRP to avoid annual tax liability.

      So incorrect. Dividends are still income whether taken as cash or additional shares

  • So extra

  • +1

    @Amanda3724

    Firstly, my credit to you for such a thoughtful and generous gift.

    I will agree with most of whats posted, in that it becomes hard to invest on a child's behalf…..BUT there is a way it can be done that means most of the concerns raised won't be applicable.

    There are a very few listing on the ASX which offer the following option to shareholders, that of a Dividend Substitute Share Plan (DSSP) - this allows the holder to not pay any tax on their holdings - and this is put off until they sell their shares e.g when they're an adult.
    https://www.reddit.com/r/fiaustralia/comments/k4bvtm/who_is_…

    The companies that offer these are also very good choices for such a gift as they're Listed Investment Companies (LIC's) which were essentially a version of an index ETF before they existed. ASX codes AFI, DJW and MIR definitely offer this option - and it's often recommended for folks who want like you to buy on behalf of a child.

    Now having said all this it's still likely a PITA as you will need a TFN & the purchase has to be made through a broker and then offmarket transferred etc - and you have the small parcel size etc. I would think education is the gift that keeps on giving so finding something that that sphere might be an easier & higher bang for buck approach? But again i think your approach is noble and I commend you for it.
    https://passiveinvestingaustralia.com/investing-for-children…

  • You can open a Vanguard child account and put some money in their accounts:
    https://www.vanguard.com.au/personal/invest-with-us/account-…

    I would probably go with commbank investing options though, Vanguard doesn't have 2FA security beyond SMS.

  • If only we still had child labour - you could top up their super for them….😎

    Seriously though, a gram of gold or a $250 value of silver - or even a currency set from the mint is simple and without all of the trailing admin.

    • AFAIK children can have super accounts without being employed.

      • Ah yes, super accounts from birth. There's a bunch of Redditors who think they've discovered a genius hack to make their kids/nieces/nephews a lazy $2M by age 60.

  • +9

    Thank you all so much for your advice. It seems my shares idea has too many hurdles to jump through, but I love the idea of a commemorative coin from the mint, so as soon as bullion trading is open again I’m going to buy an Aussie themed 2025 coin for him. It may not make him a heap of money, but it’s something special he can keep forever if he chooses to,

    • That’s a lovely thought. I hope the family have wonderful lives in Australia.

  • AFAIK the minimum initial share purchase is $500 and $100 thereafter.

    $250 as a starting point won't butter the parsnip.

  • Gift such child with a gold (bullion) Australian themed coin.

    A bit more than $250 but intrinsically valuable and with a classic Australian icon/theme

    Example: 1/10oz Perth Mint Kangaroo Gold Coin - $550.88 AUD

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