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Will your kids pay tax this year?

Posted by Naomi Rosenthal on Monday, July 18, 2011 Under: Financial Planning

In the most recent budget, the government changed the taxation laws such that minors receiving non-working income WILL NOT be entitled to the low income tax offset of $1,500 from 01 July 2011.

 

This means that if you have kids with investment monies (such as a bank balance that has accrued from all that birthday money), they might find they have a tax liability at the end of the financial year.

 

It also has an impact on your more complex affairs such as paying distributions from a family trust. And the further impact this has on future savings opportunities.

 

Example

Financial Year

Tax-Free Income

Amount Invested in a bank
account at 6% interest

2010/2011

$3,335

$55,583

2011/2012

$416

$6,933

 

The above example shows that your children will start paying tax if they have more than around $7,000 sitting in a savings account.

 

We have a range of solutions to help you overcome this change in tax law. One of these is to utilize a great product packed with fantastic features and flexibility called an investment bond.

 

An investment bond has a 30% tax rate. Compare this to 66% tax rate for investment income between $417 and $1,307 and 45% above $1,307. This can give you tax savings up to 36%, keeping more money in your child’s pocket.

 

To discuss a better way to invest for your kids (or grandkids!), contact us today on 02 9417 6011.

In : Financial Planning 


Tags: "investment bond" "investing for kids" "save money" "save tax" "low income tax offset" "budget changes" 

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Responsibility for the content and opinions expressed herein rests solely with the author and opinions expressed do not necessarily represent the views and opinions of Professional Wealth Services Pty Ltd.
The information on this website is general in nature and may not be relevant to your individual circumstances. You should refrain from doing anything in reliance on this information without first obtaining suitable professional advice. You should obtain and consider a Product Disclosure Statement (PDS) before making any decision to acquire a product.
This information is for Australian residents only.
Whilst care has been exercised, the taxation information contained is provided as a guide only and may not be relied upon. If in doubt, you should seek independent tax advice from a qualified tax adviser.

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