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I want to buy some shares for my young kids. If I set-up a trust the income tax on dividends will need to be paid by me (at 35%). Can I get the kids a TFN and buy them in their name so they can benefit from the $18k tax threshold?
Responses
Hi Jack,
Have you thought about Bitcoin? It would have to be in your name. I have purchased for my daughter who is only 1 because i San let it grow and hopefully pay for her education. :)
Jacqui
Hi Jack,
No, you can't. Children under 18 are subject to minor tax rates for unearned income (income from investments) and can only earn a very small amount before paying top marginal tax rates.
You could set up a discretionary family trust and distribute income up to the very low tax free threshold (it's like $416 per annum off the top of my head) to the children, and then the rest to you. However, the running costs of the trust are probably going to be more than the benefit.
A lot of people will probably try tell you that you could/should invest in an insurance bond, but the net returns are similar to that of someone who invests on the top marginal tax rate. I would suggest not using an insurance bond.
For most people, you're probably better off just investing in your name, or if you have a low income spouse, investing in their name and gifting the money to the children in the future.
Cheers
Glenn
Hi Jacqui,
No, I have not thought of Bitcoin... Was thinking of a reinvestment strategy for a an ETF...