Can you open a savings account for your grandchild in Australia?
While you cannot 'gift' a savings account to a child in Australia, you may be able to open an account for them where you help them save for their future.
You can't gift a savings account to a child in Australia, but you may be able to open one in a child's name.
In most cases you need to be the child's parent or legal guardian to open an account on their behalf.
You can create a savings account in your name with the intention of gifting the money to a child, but you will need to pay tax on the interest.
Can I open a savings account for my child or grandchild?
Most banks specify that you must be either a parent or guardian in order to open a bank account on behalf of a child.
Some banks, like Greater Bank, allow anyone to open an account for a child but you'll need to do so in branch and have the child's birth cirtificate.
These savings accounts are in the child's name, but managed by the adult until the child is older – usually from 14 years.
Technically, you cannot gift a savings account to a child in Australia, but if you're a grandparent wishing to set aside money for your grandchild, you could work with your grandchild's parents to open a suitable account.
The reason these somewhat strict rules are in place is because money in the account is earning interest, and depending on the account balance, the child named on the account may be subject to tax on their interest earnings.
Ready to open an account?
Check out a range of savings accounts available for kids to kick-start you child's savings journey.
Loretta has decided that this year for Christmas she is going to open a savings account in the name of her grandchild Lou with Suncorp Bank. As his legal guardian, 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.
Loretta's friend Joy also wishes to set up an account for her grandchild Jamie, but she's not a legal guardian. She has to find a bank that allows her to open the account, or ask her daughter if she can set up an account for her grandchild, so Joy can transfer money to it every month.
* This is a fictional, but realistic, example.
What are the tax implications of opening a savings account for a child?
For a savings account held in the name of the child, there is a tax-free threshold of up to $420 (in interest earnings) per financial year. Anything above $420 would need to be included on a tax return and a tax file number needs to be supplied.
No tax will be withheld by the bank if the child is:
any age, and they earn less than $120 per year from savings accounts.
under 16 and they earn between $120 and $420 from savings accounts per year, and they provide a birthdate.
under 16 and they earn over $420 from savings accounts per year, and they provide a TFN.
aged 16 or 17 and earns $120 or more from their savings account per year, and they provide their TFN.
If you don't provide a tax file number and interest is earned above these thresholds, the child will need to register a tax file number and complete a tax return to get any interest owed to them refunded.
To complicate things a little further, who fills out the tax return with the interest from the savings account depends on who owns and uses the funds.
If a parent deposits money into the account and withdraws funds to pay for school expenses, any interest earned must be included on that parent's tax return.
If parents or other family members simply deposit money into the account, the interest belongs to the child.
Getting caught out by tax
"I opened an account for my eldest daughter and after a few years, I transferred the money out to a different investment, but kept the account open. I forgot it was in my daughter's name and added some of my own savings for a while. Then, every month, money was withheld by the bank, because the interest was more than was allowed without a tax file number. I have to register my daughter with a tax file number and submit a tax return to claim that money back, but I haven't gotten around to it, so the ATO still has about $100 that is technically mine."
What's the youngest age you can open an account for a child?
There is no minimum age limit to open a bank or savings account for a child, but you will need to check with the individual bank for full eligibility criteria. Some banks have different savings accounts for children of different ages.
While there is not a minimum age for a savings account, there are maximum ages. Some accounts are for children under 14, some for under 16 and others for under 18.
Aussie kids have savings accounts.
A Finder survey found that while only 9% of Australian kids under the age of 12 had a debit card, 57% had a savings account.
Others can contribute to the account, such as family and friends
With cash becomming less used, it's a way to gift cash digitally
The balance will benefit from compound interest
Savings accounts are low-risk - unlike shares, you can't lose money
Savings accounts are protected by the Government guarantee scheme
Savings accounts are free to open and have no ongoing fees
I opened an account for my daughter
"I opened a savings account for my daughter when she was just a few months old. The account is in her name, however is managed by my husband and I until she's 18.
The account is a great way for her aunties, uncles and grandparents to gift her small amounts of money for things like Christmas and her birthday, which I'm sure she'll really appreciate when she turns 18."
Rebecca Pike is Finder’s money editor, with over 7 years of experience in mortgages and personal finance. A frequent TV and radio commentator, she frequently appears on Sunrise and 7News, Today and 9News, as well as Sky News, Channel 10 and across radio and print. Rebecca previously served as Editor of Mortgage Professional Australia. She has a Master’s degree in Journalism as well as ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products, which comply with ASIC guidelines.
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What is the best account and bank to open a bank savings account for my new born son?
Finder
AlisonNovember 22, 2022Finder
Hi David,
We’re a financial comparison site and can’t give you any personal advice as to which products are best for you. You can learn more about opening a bank account for a baby and see a list of kids’ savings accounts on this page.
Thanks,
Alison
TriciaNovember 17, 2017
I would like to save some money for my grandson.
Bank accounts / term deposits have low interest rates
Can I open a share account for him?
MariaNovember 18, 2017
Hi Tricia,
Thank you for your inquiry.
Application requirements can vary between different international share trading account providers. Generally, the age requirement for personal applicants would be over 18 years old. This guide on international share trading might provide more insight.
It would be best to check this directly with the Share Trading Provider so you can confirm what they can offer you based on your preferences.
I hope this helps.
Best,
Maria
itsivmJuly 8, 2017
Sorry, I mistakenly posted the first part of my email before I had finished. My question is this – I was thinking of sending £600 to £1000 once a year to my Australian grandchild directly to his bank account. Of course, the exact $AUD amount depends on the currency exchange at the time. Is there a maximum that can be deposited/gifted by a grandparent? Thank you.
LiezlJuly 8, 2017
Hi Itsivm,
Thanks for your question.
This will depend on which bank the child’s savings account was opened, best to confirm this with the bank. While most banks do not have a maximum deposit limit, there is, however, a maximum interest that can be earned by the child account for the financial year that is considered tax-free, as mentioned in the case study above.
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What is the best account and bank to open a bank savings account for my new born son?
Hi David,
We’re a financial comparison site and can’t give you any personal advice as to which products are best for you. You can learn more about opening a bank account for a baby and see a list of kids’ savings accounts on this page.
Thanks,
Alison
I would like to save some money for my grandson.
Bank accounts / term deposits have low interest rates
Can I open a share account for him?
Hi Tricia,
Thank you for your inquiry.
Application requirements can vary between different international share trading account providers. Generally, the age requirement for personal applicants would be over 18 years old. This guide on international share trading might provide more insight.
It would be best to check this directly with the Share Trading Provider so you can confirm what they can offer you based on your preferences.
I hope this helps.
Best,
Maria
Sorry, I mistakenly posted the first part of my email before I had finished. My question is this – I was thinking of sending £600 to £1000 once a year to my Australian grandchild directly to his bank account. Of course, the exact $AUD amount depends on the currency exchange at the time. Is there a maximum that can be deposited/gifted by a grandparent? Thank you.
Hi Itsivm,
Thanks for your question.
This will depend on which bank the child’s savings account was opened, best to confirm this with the bank. While most banks do not have a maximum deposit limit, there is, however, a maximum interest that can be earned by the child account for the financial year that is considered tax-free, as mentioned in the case study above.
I hope this has helped.
Cheers,
Liezl