Baby bank accounts

Opening a bank account in your child’s name can be a good idea for a number of reasons. It can provide an easy way to save towards university expenses, offer bonus interest and help to teach your child about saving early in life.

Can you open a bank account for a baby?

Some banks and credit unions provide accounts especially for children less than 18 years of age. You can open any such account in your baby’s name, provided you and your baby meet some basic eligibility criteria.

A typical baby account provides some level of interest, with some accounts letting you earn bonus interest as well. Baby bank accounts tend not to charge ongoing account-keeping fees. However, they may come with some depository requirements along with restrictions on withdrawals.

How do I open a bank account for a newborn?

Banks which offer accounts for children typically make the process easy. While it may vary between bank, once you've found the right account for you these are typically the steps to open an account:

1. Gather the right documents

To open an account for your child you will need a form of ID for yourself as the parent or guardian as well as a form of ID for your child, such as their birth certificate. You may also need to provide evidence of you being their parent or guardian such as a birth certificate or court order.

2. Apply online or in a branch

Check that your chosen bank has physical branches if you want to apply in person.

3. Provide tax documents

Because child bank accounts are typically used for saving and will therefore accrue interest, you need to provide either your own or your child's tax residency and Tax File Number (TFN).

Things to look for with baby bank accounts

• Type of account. There are specific accounts for children which will accrue interest and can then be taken over by your child when they reach a certain age.
• Fees and rates. Some bank accounts will have account-keeping fees and some accounts will have better interest rates than others.
• Tools and features. Even bank accounts for young children can have apps with helpful tools to reach savings goals.
• Easy transfers. While most Australian bank accounts these days have easy transfer options, make sure you can easily and quickly transfer money to the account if you're planning on putting money in.

Can I open an account before my baby is born?

Unfortunately, you cannot open a bank account for your baby before they're born. To open a baby bank account you’ll have to provide your baby’s birth certificate. You get this document only after your baby is born.

Are there any government regulations or taxes on baby bank accounts?

One of the key regulations that surrounds children's savings accounts is who should declare tax on the interest earned. This essentially depends on who owns and uses funds in the account.

You, as the parent, would own the money if you’ve added funds in the account and spend it as per your liking. In this case, you’ll have to include the interest earned in your income tax return. This is also the case if you open a trust account in your child’s name, where you control its income and expenditure.

The funds in the account can come in the form of pocket money, birthday presents, Christmas presents and savings from part-time earnings. In this case, if nobody other than the child uses these funds then the interest earned becomes the child’s income. The child does not have to lodge a tax return if their only source of income is interest not exceeding $416. If the bank withholds pay as you go (PAYG) tax, the child should file for a refund.

If the Australian Taxation Office (ATO) considers the money deposited in an account to be excessive it may carry out further investigation to establish the source of the funds. In case of a joint account held in multiple names, the division of interest happens equally among all account holders.