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Compare children's savings accounts - Data last updated Today, 24 Oct 2017

Now showing 1 - 12 of 12 children's savings accounts
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Saving is a great habit to teach children. The sooner they learn about financial discipline and delayed gratification, the sooner they can start building wealth. And the sooner they start building wealth, the easier they’ll find it to take their first steps on the property ladder and save for their retirement.

Another benefit of getting kids involved with saving is that they learn how to manage a bank account. The more they develop their financial literacy, the easier they’ll find it to understand more complicated products and strategies later in life.

With that in mind, a children’s savings account can be a good way for children to learn about money, saving and banking.

Most lenders that offer traditional savings accounts also offer dedicated savings accounts for children. As a general rule, children’s accounts don’t charge ongoing fees, yet they pay relatively high interest rates.

Standard features

Children’s accounts generally allow free deposits and withdrawals – but the free withdrawals might not be as free as they sound.

Many children’s accounts will pay a relatively low level of regular interest, as well as a relatively high level of bonus interest for those months in which no withdrawals are made. So free withdrawals can actually prove costly.

Still, there are two benefits to these sorts of products. First, they give children an incentive to increase rather than decrease their savings. Second, they teach a valuable lesson that financial products often come with catches and can be more complicated than they initially seem.

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Tax rules

Given that children’s savings accounts can only be opened by minors, they must be free of tax obligations, right?

Wrong.

The Australian Taxation Office (ATO) imposes strict rules around children’s savings accounts because it wants to stop parents evading taxes by parking money in their children’s accounts.

Here, in the ATO’s words, are the official rules on children’s savings accounts:

“If your child is less than 16 years old, special rules apply to their income from a savings account. When we work out their age, we treat them as being under 16 years old until the end of the calendar year in which they turn 16.

“If your child is:

  • any age and they earn less than $120 per year from savings accounts per year, their financial institution will not withhold tax
  • less than 16 years old and earns between $120 and $420 from savings accounts per year and
    • provides either their date of birth or a tax file number (TFN), the financial institution will not withhold tax and they don't need to lodge a tax return
    • doesn't provide either their date of birth or TFN, the financial institution will withhold pay as you go (PAYG) tax at 49% and they need to lodge a tax return if they want a refund
  • less than 16 and earns $420 or more from savings accounts per year and
    • provides their TFN, the financial institution will not withhold tax
    • doesn't provide their TFN, the financial institution will withhold PAYG tax at 49% and they need to lodge a tax return if they want a refund
  • 16 or 17 years old, earns $120 or more from their savings account per year and
    • provides their TFN, the financial institution will not withhold tax
    • doesn't provide their TFN, the financial institution will withhold PAYG tax at 49% and they need to lodge a tax return if they want a refund.

“If you have a joint account between an adult and a child aged under 16 years, the same rules apply as those for a 16- or 17-year-old.”

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