What are the tax implications of opening a kids’ bank account?
Learn about the taxation implications when you claim interest from a kids’ bank account.
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!
If your child’s bank account has a balance that is earning interest, you need to know how this income is taxed, or whether you’ll need to pay tax at all. The person who contributes money to the kid’s bank account and uses the money must include any interest earnings on their tax return. Read on to find out more about this topic.
Are there any tax implications?
There are no taxation guidelines for opening a kids’ bank account. A kids’ bank account can be opened in the name of the child (if the account type allows it), you can open an account on your child’s behalf as a trustee or a bank account can be opened in the name of a controlling trust.
You’ll need to pay attention to the Australian Taxation Office (ATO) guidelines if funds in your child’s bank account are generating interest. The ATO has specific rules about taxation of interest earnings from a child’s bank account. You’ll need to look at who is providing the money and who is using the money to work out how this income is taxed.
- Maximum rate: 1.2% p.a.
- Standard variable rate: 0.1% p.a.
- Monthly fees: $0
Search and compare kids bank accounts below
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Looking for a prepaid card for your kid's pocket money?
Spriggy is a mobile app with a linked prepaid card which helps Australian parents and their kids to manage their money together and track their progress in a fun, interactive app.
- $30 per year for each child
- Pre-paid Visa debit card accepted anywhere
- Cards come in a range of funky, kid-friendly designs
- Keep tabs on your child's spending, saving and chores via the Parent Wallet
Try the app for free for 30 days. Sign up online in 2 minutes or less by clicking the "Go to site" button.
Who declares interest income from a child’s bank account?
The ATO states the person who declares interest earnings from a kid’s bank account depends on, “who owns or uses the funds of that account (no matter what type of account it is or the name of the account holder).”
If the child’s bank account is held jointly, then interest earnings are divided among the joint account holders and declared in their tax return.
What is the minimum amount of interest you can earn before it needs to be declared?
A financial institution will withhold tax at the highest rate in the following situations:
- Your child earns more than $120 a year in interest from funds held in their bank account
- Your child is younger than 16 and earns more than $120 but less than $420 in interest and they have given their Tax File Number (TFN) and date of birth to the account provider
As part of your yearly tax return, it might be worth considering an overhaul of your situation. Learn more about tax returns, what you can claim and what you need to declare to the ATO.
Does my child need a Tax File Number (TFN)?
A child of any age can apply for a TFN, and they can do this at school. Your child will need a Tax File Number to lodge a tax return and declare any interest earnings above the aforementioned thresholds.
Open a kids’ bank account to give your child the best financial start in life. Make sure you’re aware of the taxation implications of interest income from the bank account, especially if there’s a large balance. Compare kids’ bank accounts on finder.com.au today.
The latest in banking
A review of Australian Unity’s fixed rate home loan. Discover the features and benefits.Read more…
The Newcastle Permanent Basic Access account has no monthly fees and may suit you if you don’t make many transactions.Read more…
Virgin Money Go bank account: Pay no monthly account fees, earn points as you spend and earn bonus interest on a linked Virgin Money savings account.Read more…
It's common to have a few different bank accounts that each have a different purpose. Here's how you may benefit from having multiple bank accounts and the traps to avoid.Read more…
Xinja is closing its bank account and Stash savings account and returning its banking licence. Here's what you need to do if you're a customer.Read more…
More guides on Finder
Amazon Prime Day: 60% off fashion deals you’re not going to want to miss
Bargain hunters - get ready to save on Nike, New Balance, Cotton On, Tommy Hilfiger, Calvin Klein and so much more.
Amazon Prime Day best home deals: Bose, iRobot and more
From home speakers to robot vacuums, these are the items to watch out for this Prime Day.
Staple items worth a splurge and how you can grab a cheeky 30% off all of them
We've got a cheeky 30% off at THE ICONIC so here are the staple items worth a splurge because the savings are too damn good.
THE ICONIC x Finder: Huge 30% off sale + 5 things to shop right now
THE ICONIC's massive sale is exclusive to Finder members and applies to over 40,000 must-have items.
Why the BHP, Rio and FMG share prices are rising
Shares in mining giants BHP, Rio Tinto and Fortescue Metals have climbed between 10%-16% in the last 6 months.
Finder Daily Deals: The 5 best online deals in Australia today
Today's best Finder Daily deals include: $1,000 off Dell gaming laptops, 30% off kids toys, win $10,000 with Optus.
eBay EOFY sales: Best deals from Apple, KitchenAid and more
Score up to 65% off best-selling products with these top end of financial year offers.
Thinking about teeth aligners? Here’s how to make them more affordable
SPONSORED: Perfect teeth could be in closer reach than you think.
Ask an Expert