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.