Kids savings account

Hi all, I have 2 little ones and spinning my wheels on where to get best deal for their savings account. So many restrictions on how much they can deposit before they get hit with 66% tax rate and so many options.

If anyone is keen to share their approach it would be wonderful ...

 

Mine goes into the offset account.
All transactions are recorded in an Excel Spreadsheet with simulated interest.
Regardless, they are going to get more than what's saved in the account anyway when it comes time.

I don't see the point of a separate savings account where I have to pay tax on earnings when it can go into a home loan instead.

 

I've thought about that too. I'll help them with deposit in IPs when they turn 18.

 

Have you looked at insurance bonds?

From Choice

PROS

• Can be set up in your or your child's name. Some insurance bonds allow you to nominate an age when the ownership will transfer to the child.
• Tax advantages: if you hold the investment for ten years and contribute no more than 125% of last year's contribution each year you won't be taxed for the earnings. Earnings will get taxed within the insurance bond at the company tax rate of 30%. If the funds are accessed in the first eight years then all earnings are assessable. If accessed in years eight to nine then two thirds (2/3) of the earnings are assessed and if accessed in the ninth year but before the tenth then one third (1/3) is assessed. So, if you are on a lower marginal tax rate than 30% you will receive a credit. If you are on a higher marginal tax rate you will need to pay additional tax if you access the earnings before ten years.

CONS

• Entry, management and other fees may apply.

 

Depending on your lender and the number of loans you have, perhaps you could set up a couple off dedicated offset accounts for them (in your name)...? Manually calculate the interest the have earned (saved you) periodically.

 

Financially it's going to be better to put it in the offset account. This helps smash your debt down faster and increases chances you can have real family wealth rather than a couple of dollars earning next to nothing in a savings account.

 

Thanks everyone for the replies ... PPOR paid off so no offset but this is a great idea.

 

Did the same and when it gets to a decent amount, it gets lumped into one of the EFT accounts we have again under our names.