Can you give the gift of saving with an Australian savings account?
Almost every bank or credit union in Australia has special accounts that are structured for children.
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
Technically you are not permitted to gift this type of account to a minor in Australia, but a child will certainly benefit from one that is opened by a parent or legal guardian.
Gift savings accounts are available in countries such as the United States, where these types of accounts can be used to help cover the costs of a child’s ongoing education. Switzerland also allows for gift savings accounts, but in this case there is no limit on what the balance may be used for.
- Maximum rate: 1.1% p.a.
- Standard variable rate: 0.1% p.a.
- Monthly fees: $0
What is a gift savings account?
In Australia, a parent or legal guardian is permitted to open an account in the name of their child. These gift savings accounts are managed by the adult until the child reaches an age where they are mature enough to take on the responsibility themselves.
The money in the account is earning interest, and in order to be considered a child’s account, cannot be used for normal child rearing expenses. Depending on the account balance, the child named on the account may be subject to tax on their interest earnings.
How does a gift savings account work for my grandchild?
Loretta has decided that this year for Christmas she is going to open a savings account in the name of her grandchild Brian with Suncorp Bank. As his legal guardian, she realises that she is permitted to do so as long as she can provide Suncorp with a copy of his birth certificate. With this account, her grandson can earn bonus interest when a monthly deposit requirement is met, and electronic deposits can be set up from her own bank account or from anyone else.
Since Brian is named as the primary account holder and is still a minor, there is no need to worry about having to pay taxes on the interest earned, so long as that amount does not exceed $416. If it does, then the child account holder will need to lodge a return with the Australian Tax Office at the conclusion of the tax year.
What are some other great financial gifts for children?
If you want to give a financial gift to a child that is not a basic savings account, you could think about a high interest savings account or a term deposit. Of course the same rules would apply in terms of tax on interest earnings and parental access, but a child will learn at a young age how to determine how much time and money is needed to help reach a financial goal.
For really young kids, start them off with a simple piggy bank where they put their spare change away for a rainy day purchase. With this type of financial gift for children, you can show them the cost of something they want to have, and then help them to see how quickly it can be purchased just by inserting a few cents a day.
An insurance bond can also be established in a child’s name and work like a managed fund towards savings toward educational or other large expenses. There are also tax advantages to opening this type of gift savings product that make holding onto it for an extended period of time worthwhile.
Is Christmas the best time to give these gifts?
Gift savings accounts and other financial gifts for children can be given for any occasion, including Christmas. While a passbook with some numbers printed inside may not seem like a good substitute for the latest video game at the time, kids will quickly learn that a savings account is a gift that keeps on giving. Once the child has an established gift savings account, you can help make it grow with monetary gifts for birthdays, graduations and other special occasions.
You may also be interested in
Did you know that the average Australian has $29,091 in savings? Learn about this and more in our savings stats report.Read more…
AMP Saver has increased its interest rate with a new bonus rate offer of up to 1.25% p.a. on your savings.Read more…
From March it's going to be harder to earn bonus interest on your ING savings account.Read more…
You can open a joint savings account with another person to save for a shared goal. Here's how they work and how to find the best joint savings account for you.Read more…
Four steps to creating an emergency savings fund and how much money you should aim to keep in it.Read more…
How do we rank savings accounts to get our top picks?Read more…
More guides on Finder
How to buy shares as a gift in Australia
Giving shares to a loved one is a great idea, but how do you actually do it?
Australia’s youngest banking customers
When it comes to teaching kids about money, new finder.com.au research shows nearly half of Aussie kids have a bank account by the time they turn one. Find out how to set up an Australian bank account for your child.
What do you need to open a bank account?
From your personal and financial information to proof of ID, find out what documentation you need to provide to open a new bank account.
Children’s bank accounts for 5-10 year olds
If you’re looking to open a bank account for your child, compare the bank accounts for 5-10 year olds and learn about the essentials of kids banking along the way.
What is the difference between a kids bank account and a regular bank account?
If you’re unsure about opening an account for your child, here’s how kids bank accounts are different from regular bank accounts.
bcu Scoot Super Saver Account
A savings account for kids under the age of 13, the bcu Scoot Super Saver Account pays an ongoing interest rate with no deposit conditions to meet.
Children’s bank account freebies
Encourage your kids to save with these free toys, games and discounts from children’s banking programs across the country.
What are the requirements for opening a bank account for kids?
What documentation do you need to provide to open a kids bank account for your child? Find out here.
4 financial gifts you can give this Christmas
Looking for a last minute Christmas gift? Here are some neat ideas with a financial focus.
Top children’s savings accounts compared
We compare the top children's savings accounts offered by some of Australia's biggest banks and highlight the benefits and rewards on offer.
Ask an Expert