I want to purchase some equities in the name of my son and want to keep my name also on the investment until he is older. How do I do this?
Top answer provided by:
Luke Mase
Hi See, firstly I think it’s great that you are looking to give your son a head-start when he is older.
Buying shares for a child who is a minor must be done in the correct way due to the potential tax ramifications if done incorrectly. In Australia, ‘unearned’ income (E.g. Dividends) allocated to a minor is taxed at the following rates:
|
Tax Rates on Unearned Income for minors |
|
|
Eligible Income |
Resident Tax Rate |
|
$0 - $416 |
NIL |
|
$417 - $1,307 |
66% of excess over $416 |
|
Over $1,307 |
45% of the total amount that is deemed as unearned + Medicare Levy (If applicable) |
The first thing you will need to do when purchasing shares is to open a broking account. When you open an account, you will need to provide personal details such as your name, date of birth, tax file number etc.
If you are looking to purchase the shares in your son’s name, you should create the broking account in your name with the shares held in trust for your son. This can be achieved by making the account designation your son’s name. E.g: Account name: John Smith <Tom Smith a/c>.
By setting up the account correctly you will ensure that your son has an investment that is building for his future and will not be taxed in a detrimental manner (as noted above).
Other considerations such as what to invest in and how much risk to take are also very important considerations and I would recommend speaking to a Financial Adviser before any decisions are made.
While the Adviser Ratings Website facilitates the question and answer functionality, all such communications are between users and authorised financial advisers, of which Adviser Ratings has no affiliation. Adviser Ratings is not the advice provider and does not provide financial product advice and only provides information that is general in nature.
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