family-opening-acct

Set up a secure financial future for your children with a trust account

Do you want to set up a trust account for your children? Here’s what you need to do.

By opening a trust account for a loved one you can enable them to pay for their education, their wedding, or even give them the head start they need to put a deposit on a house.But what is a trust account and what do you need to know before you open one? Let’s take a closer look.

Savings accounts you can open in trust for your children

Rates last updated October 18th, 2019
$
$
months
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned Product Description
Rabobank Online Savings High Interest Savings Account
2.50%
1.05%
1.45%
$0
$0 / $0
Maximum variable rate of 2.50% p.a. for 4 months, reverting to a rate of 1.05% p.a. No deposit or withdrawal conditions. Available on balances below $250,000
UBank USaver
2019 Winner
UBank USaver
2.10%
1.04%
1.06%
$0
$0 / $0
Ongoing, variable 2.10% p.a. when you link your USaver account to a UBank Ultra transaction account and transfer at least $200 per month into either account. The linked transaction account has no monthly fees and no international fees. Bonus interest available on balances up to $200,000.
HSBC Flexi Saver Account
2.15%
0.65%
1.50%
$0
$0 / $0
Ongoing, variable 2.15% p.a. when you grow your balance by $300+ per month. Earn bonus interest even if you make withdrawals during the month. Available on balances up to $5,000,000.
MyState Bank Bonus Saver Account
2.50%
0.80%
1.70%
$0
$0 / $0
Ongoing, variable 2.50% p.a. when you deposit at least $20 into the account each month and make five or more Visa Debit card transactions from a linked MyState transaction account.
Suncorp Growth Saver Account
2.05%
0.20%
1.85%
$0
$0 / $0
Ongoing, variable 2.05% p.a. when you grow your balance by at least $200 (excluding interest) and make no more than one withdrawal in the month. Available on the entire balance.

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What’s the difference between a trust account and a trust fund?

When some people hear the words “trust account” they immediately think of a trust “fund”, which is actually a completely different thing. A trust account is a bank account that you open for your child; however, rather than opening the account in your child’s name, you retain ownership of the account. A parent or grandparent can be the trustee for the child’s account, but once the child turns 18, control of the funds in the account will pass to them.

Meanwhile, a trust fund is a legal arrangement in which the ownership of a person’s assets (not just cash but shares, bonds, property and even antiques) is transferred to a family trust and managed by trustees for the benefit of others. Any person who receives cash, property or other assets from the trust is known as a beneficiary.

Family trusts are usually only considered as an option for managing a child’s future finances when you have substantial assets to invest. Once the child reaches a certain age, for example 18 or 21, they can access the assets in the trust fund.

Looking for a kids bank account instead?

If you're looking to give your children a good financial start, it's might be worth looking into a kids bank account. Take a look at our Kids Banking Hub to find out more.

What type of trust account?

There are two types of accounts you should consider when opening a trust account for a child: a savings account and a term deposit. High-interest online savings accounts offer some of the best interest rates around, allowing you to grow your balance as quickly as possible. Some even allow you to earn bonus interest if you satisfy specific conditions, such as depositing a minimum amount into the account each month.

Meanwhile, term deposits provide the security and consistency of guaranteed returns. These accounts let you lock in a fixed interest rate for a prearranged time period, for example one or two years. This means you will not be affected by any interest rate drops that occur, but you won’t be able to enjoy the benefits of any rate rises being applied to your deposit.

How to open a trust account

Banks, building societies and credit unions around Australia offer a variety of savings accounts that you can open in trust for your child. There are typically three ways you can apply to open an account in trust:

  • Online
  • Over the phone
  • In person at a branch

However, you will most likely need to visit a branch to provide ID for your child (you won’t need to verify your identity if you’re an existing customer, but you will need ID if you’re opening an account with a new bank). You may need your child’s birth certificate and other forms of acceptable ID, for example a Medicare card or school attendance letter. The documentation requirements vary between banks, so it’s a good idea to phone ahead and confirm what paperwork you need to bring.

Finally, you will need to provide your Tax File Number (TFN) when you open an account. Read on for information about why this is important.

How and when do the funds transfer to my beneficiary?

If you open a bank account in trust for your child, you will need to pass control of the account to the child when they turn 18. This will be an automatic process, and your bank will outline the terms and conditions when you open the account.

Depending on the terms and conditions of the account, you may also be able to hand control over to your child before they reach 18 years of age. However, some bank accounts can only be held by people who are at least 18 years of age, so check these requirements with your bank.

Are there any tax implications to consider?

The ATO has strict rules concerning children’s savings accounts and there are several important tax issues to consider if the account you hold in trust for your child earns interest income. Regardless of who holds the account or what type of bank account it is, the person who declares the interest is determined by who provides and uses the funds.

If you provide the money and spend it however you like, you will need to declare the interest on your income tax return. This means you will need to quote your TFN when you open the account or, if a formal trust structure is in place, quote the trust’s TFN.

This is different to the tax rules that apply to interest that children under 16 earn on savings accounts. If a child provides money into a savings account and decides how it is spent, taxes will apply if they earn more than $420 interest per year.

If you’re at all confused about the taxation rules concerning trust accounts, ask your accountant or financial adviser for assistance.

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Updated October 18th, 2019
Name Product Fee for unlimited income items (Wages) Deduction Item Fees Payment Options Online tax returns On-site tax returns
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$0 for up to $1000 of deductions
$65 for an investment property
Credit/Debit card
Cash
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Lodge individual & company tax returns online or in-person. Fast online form with additional options to complete tax returns for investment properties, sole trader tax and share investments.
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$0 when you purchase the $49 income package
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Option to pay with your tax refund for an extra fee of $10 for basic returns. Lodge individual & company tax returns. Fast online form & free live chat.
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Business tax: starting from $250
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For motor vehicle expenses: $15
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Option to pay with your tax refund for an extra fee of $20. Lodge individual & company tax returns. Fast online form & free live chat. Special offer for business owners: Register your new company for only $499 (includes $488 worth of government fees and $100 cashback into your new business bank account). Click 'Go to site' to find out more. T&Cs apply.
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$0 for up to 2 deductions
$29 for additional deductions
Credit/Debit card
Pay with your tax refund (no upfront payment)
Australia wide
Sydney
Option to pay with your tax refund for an extra fee of $29. Online and in-person tax services for individuals, sole traders and companies.
$99*
Business tax: starting from $179
$29 for up to 2 deductions
Additional $29 for extra deductions
Credit/Debit card
Bank transfer
Pay with your tax refund (no upfront payment)
N/A
Melbourne
Option to pay with your tax refund for an extra fee of $29. Basic tax returns over the phone Australia-wide. In-person individual and business tax returns in Melbourne.
$155*
finder Exclusive: $5 discount
$0 for all work related deductions
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Canberra
finder Exclusive: $5 discount when you apply for a tax return with Bennetts Tax through finder. Click 'Go to site' and complete the contact form to find out more. Income item fee includes returns on interest, dividends, Superannuation and pension. A flexible option for individuals, sole traders and companies.

Compare up to 4 providers

Updated October 18th, 2019
Name Product Fee for unlimited income items (Wages) Deduction Item Fees Payment Options Online tax returns
$99*
$0
Credit/Debit card
Pay with your tax refund (no upfront payment)
Australia wide
Option to pay with your tax refund for an extra fee of $20. Lodge individual & company tax returns. Fast online form & free live chat. Special offer for business owners: Register your new company for only $499 (includes $488 worth of government fees and $100 cashback into your new business bank account). Click 'Go to site' to find out more. T&Cs apply.
$79*
$0 when you purchase the $49 income package
Credit/Debit card
Pay with your tax refund (no upfront payment)
Australia wide
Option to pay with your tax refund for an extra fee of $10 for basic returns. Lodge individual & company tax returns. Fast online form & free live chat.
$79*
$0 for up to $1000 of deductions
$65 for an investment property
Credit/Debit card
Cash
Australia wide
Lodge individual & company tax returns online or in-person. Fast online form with additional options to complete tax returns for investment properties, sole trader tax and share investments.
$99*
$0 for up to 2 deductions
$29 for additional deductions
Credit/Debit card
Pay with your tax refund (no upfront payment)
Australia wide
Option to pay with your tax refund for an extra fee of $29. Online and in-person tax services for individuals, sole traders and companies.
$80*
Business tax: starting from $250
General deductions: $0
For motor vehicle expenses: $15
Credit/Debit card
Australia wide
A boutique firm that provides personalised experiences for all customers. Ideal option for individuals and small businesses based in Perth.
$155*
finder Exclusive: $5 discount
$0 for all work related deductions
Bank transfer
Credit/Debit card
Australia wide
finder Exclusive: $5 discount when you apply for a tax return with Bennetts Tax through finder. Click 'Go to site' and complete the contact form to find out more. Income item fee includes returns on interest, dividends, Superannuation and pension. A flexible option for individuals, sole traders and companies.

Compare up to 4 providers

Updated October 18th, 2019
Name Product Fee for unlimited income items (Wages) Deduction Item Fees Payment Options On-site tax returns
$79*
$0 for up to $1000 of deductions
$65 for an investment property
Credit/Debit card
Cash
Sydney
Lodge individual & company tax returns online or in-person. Fast online form with additional options to complete tax returns for investment properties, sole trader tax and share investments.
$99*
$0 for up to 2 deductions
$29 for additional deductions
Credit/Debit card
Pay with your tax refund (no upfront payment)
Sydney
Option to pay with your tax refund for an extra fee of $29. Online and in-person tax services for individuals, sole traders and companies.

Compare up to 4 providers

Updated October 18th, 2019
Name Product Fee for unlimited income items (Wages) Deduction Item Fees Payment Options On-site tax returns
$99*
Business tax: starting from $179
$29 for up to 2 deductions
Additional $29 for extra deductions
Credit/Debit card
Bank transfer
Pay with your tax refund (no upfront payment)
Melbourne
Option to pay with your tax refund for an extra fee of $29. Basic tax returns over the phone Australia-wide. In-person individual and business tax returns in Melbourne.
$99*
$0
Credit/Debit card
Pay with your tax refund (no upfront payment)
Melbourne
Option to pay with your tax refund for an extra fee of $20. Lodge individual & company tax returns. Fast online form & free live chat. Special offer for business owners: Register your new company for only $499 (includes $488 worth of government fees and $100 cashback into your new business bank account). Click 'Go to site' to find out more. T&Cs apply.

Compare up to 4 providers

Updated October 18th, 2019
Name Product Fee for unlimited income items (Wages) Deduction Item Fees Payment Options On-site tax returns
$80*
Business tax: starting from $250
General deductions: $0
For motor vehicle expenses: $15
Credit/Debit card
Perth
A boutique firm that provides personalised experiences for all customers. Ideal option for individuals and small businesses based in Perth.

Compare up to 4 providers

Updated October 18th, 2019
Name Product Fee for unlimited income items (Wages) Deduction Item Fees Payment Options On-site tax returns
$155*
finder Exclusive: $5 discount
$0 for all work related deductions
Bank transfer
Credit/Debit card
Canberra
finder Exclusive: $5 discount when you apply for a tax return with Bennetts Tax through finder. Click 'Go to site' and complete the contact form to find out more. Income item fee includes returns on interest, dividends, Superannuation and pension. A flexible option for individuals, sole traders and companies.

Compare up to 4 providers

*This is the minimum fee charged for income item tax returns. The price listed on this table is subject to terms and conditions. To find out more or to receive an accurate quote for your tax return, please visit the agent's website to submit an enquiry.

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Help your kids earn a little extra pocket money

Not just for children’s savings

Providing for a child or grandchild’s financial future is not the only reason why you might open a trust account. For example, if you and your family members join forces to purchase an investment property through a trust, you’ll need to set up an account where the funds belonging to that trust can be held.

If you’re a solicitor, real estate agent or accountant, you might consider operating trust accounts into which clients pay their funds. If you’re the trustee for a parent’s estate following their death, the finances they leave behind will be paid into a trust account until they can be properly distributed to the relevant beneficiaries.

While this article deals with opening a trust account for a child or grandchild, keep in mind that different circumstances and features will apply to different types of trust accounts.

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4 Responses

  1. Default Gravatar
    TomJune 19, 2018

    We live in the UK and would like to open a “Trust Account” for our granddaughter in Australia, with us as trustees. Is this possible?

    • Default Gravatar
      ArnoldJune 19, 2018

      Hi Tom,

      Thanks for your inquiry

      Opening a bank account with an Australian bank is a simple process given that you’reyou have plans to move or stay in Australia in the future. If you reside in another country and don’t intend to migrate to Australia, you’ll need to speak to a local bank who has international ties with a bank in Australia. Those on a tourist or visitor visa can open an Australian bank account by visiting a local branch and providing your passport.

      Hope this information helps

      Cheers,
      Arnold

  2. Default Gravatar
    ToniJuly 12, 2017

    If a child is under the age of 5 has a trust account that contains over $100,000, will the low income parent incur the tax from the interest?
    Also is the government guarantee capped on the child’s or the trustee’s name?

    • Default Gravatar
      MariaJuly 20, 2017

      Hi Toni,

      Yes, the tax will apply to the trust account of a child if you are the trustee who provides money and uses it. In this case, you would need to provide your TFN or quote your trust’s TFN. I would suggest that you seek out professional advice on tax from an accountant or financial adviser who will consider your personal circumstance.

      As for your second question, the government guarantee would apply to the owner of the account. Basically, the guarantee is $250,000 per person and per institution. Best that you confirm with your bank about the guarantee for the child’s trust account. You may also visit this page for more information on government guarantee.

      Hope this helps.

      Best,
      Maria

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