Children’s bank accounts
Holly Nuske • August 7, 2024
You may wonder why your child has been taxed 47% on the interest on their bank account.
If your child is under 18 years old and has a savings account, you may be subject to interest.
Who declares interest?
Who uses or owns the funds in the account determines who declares the interest (no matter what type of account it is or the name of the account holder).
You need to consider who:
- Contributes the funds, including one-time and recurring deposits into the account
- Determines how the funds are spent, regardless of who it is spent on
If you provide the money and spend it as you like, you must include the interest in YOUR tax return.
If you hold a joint account, interest earned is divided equally among all account holders, who each declare their share of the income on their tax return.
If the amount deposited is considered excessive, you will need to examine it carefully to decide where the money came from and whose money it is.
Income from a savings account is treated differently from the income received from shares.
Quoting a TFN
A child can apply for a Tax File Number (TFN) – there is no minimum age to have a TFN, and children are not exempt from quoting a TFN.
When deciding whether to quote a TFN and whose TFN you should quote, you need to consider:
- Who owns or uses the funds
- Your child’s age and the amount of interest they receive
If the person who owns or uses the fund is the parent, as trustee for the child and
- No formal trust exists, quote the parent’s TFN
- There is a formal trust, quote the trust’s TFN
Your child’s age
If your child is less than 16 years old, special rules apply to their income from a savings account. When determining their age, children are treated as being under 16 years old until the end of the calendar year in which they turn 16.
If your child is:
| Your child’s age | |||
| Any age and they earn less than $120 per year (or $10 per month) from savings accounts | Less than 16 years old and earns between $120 and $420 from savings accounts per year AND | Less than 16 years old and earns $420 or more per year (or $35 or more per month) from savings accounts AND | 16 or 17 years old, earns $120 or more from their savings account per year AND |
| Their financial institution will not withhold tax | Provides either their date of birth or a TFN, the financial institution will not withhold tax and they do not need to lodge a tax return | Provides their TFN, the financial institution will not withhold tax | Provides their TFN, the financial institution will not withhold tax |
| Doesn’t provide their date of birth or TFN, the financial institution will withhold PAYG tax at 47% and they will need to lodge a tax return if they want a refund | Doesn’t provide their TFN, the financial institution will withhold PAYG tax at 47% and they will need to lodge a tax return if they want a refund | Doesn’t provide their TFN, the financial institution will withhold PAYG tax at 47% and they will need to lodge a tax return if they want a refund. | |
If you have a joint account between an adult and a child aged under 16 years, the same rules apply as those for a 16 or 17-year-old.
Amount of interest earned
The withholding tax is calculated on the total interest earned – not just the amount above the threshold ($420 or $120, depending on their circumstances).
Where a deposit has a term of less than one year, or where interest is paid more than once per year, we apply a daily pro-rata calculation of the threshold ($420 or $120 depending on their circumstances).
Lodging a tax return
If your child has had PAYG tax deducted, you will need to lodge a tax return on their behalf if they wish to claim any refund owed.
If your child does not have a TFN, you will need to get one before you can lodge a tax return on their behalf.
Interest accrued
Interest from a bank is part of your assessable income for the year. Even if the funds earning the interest were not subject to tax, the interest accrued is and must be reported in your tax return. Who declares the interest accrued on a child’s bank account, is outlined above.
The post Children’s bank accounts appeared first on Green Taylor Partners.
More GTP Articles
Minimum Wage Increase Effective from 1 July 2026 Australian workers received a pay rise following the Fair Work Commission's 2026 Annual Wage Review. From 1 July 2026, the National Minimum Wage increased to $26.44 per hour, while minimum award wages increased by 4.75%. These new rates applied from the first full pay period starting on or after 1 July 2026. For employees, the increase may provide some relief from ongoing cost-of-living pressures. It's a good idea to review your payslip and ensure your employer has applied the updated rates correctly. For business owners, the change serves as an important reminder to review payroll systems, employee classifications and award coverage to ensure the new rates have been applied correctly. As the increase took effect from the first full pay period on or after 1 July 2026, employers who have not yet updated their wage rates should act urgently. Any underpayments should be identified and rectified as soon as possible to avoid ongoing compliance issues and potential penalties. Reviewing wages now can help ensure your business remains compliant and employees receive their correct entitlements. If you're unsure whether the increase affects your business or your employees, Green Taylor Partners can help you understand your obligations and ensure you remain compliant.
New ATO App Feature Helps Protect You From Scam Calls With tax time approaching, scam activity always ramps up and unfortunately, many of these scams involve fraudsters pretending to be from the Australian Taxation Office (ATO). To help combat this, the ATO has recently introduced a new feature within its app that allows you to verify whether a call is genuinely from the ATO in real time. You can read the official announcement here: ATO launches new app feature to stop scam calls What Is the New “Verify Call” Feature? The ATO has introduced a new “verify call” function in its mobile app that allows you to confirm if a call is genuinely from the ATO - while you are still on the phone. It works in real time and gives you an immediate answer, helping remove the guesswork when you receive an unexpected call. The goal is simple: put control back in your hands so you can quickly identify and shut down scam attempts. How It Works If you receive a call from someone claiming to be from the ATO, you can: Open the ATO app on your phone Log in securely Select the “verify call” option If the call is legitimate, you will receive a confirmation notification within approximately 30 seconds. If you do not receive a notification, you should treat the call as a scam and hang up immediately. What To Do If You Receive a Scam Call If you receive a suspicious call, SMS, email or social media message: Do not reply, click on any links or download any attachments. Visit verify or report a scam to check or report it. Call the ATO immediately on 1800 008 540 , if personal information or payment has been shared with a scammer. Visit ato.gov.au/scamsafe for more information on how to protect personal information and stay safe from scammers.
As we move into the new financial year, there is a noticeable shift in conversations with clients across Western Victoria. Whether you operate a grain and livestock enterprise, a family-owned retail store, or a manufacturing business servicing regional Australia, the themes remain remarkably similar. Many regional businesses are generating strong earnings, but are also facing increasing tax, compliance and cash flow pressures. The Three Issues We're Discussing Most With Clients 1. Cash Flow Remains King Despite profitability improving for many businesses, cash flow continues to be the biggest challenge. Higher wages, increased superannuation costs, rising insurance premiums and elevated interest rates mean that profitable businesses can still feel cash constrained. For primary producers, fluctuating commodity prices and seasonal conditions add another layer of complexity. For retailers, consumer spending remains selective, while manufacturers continue to face margin pressure from labour and input cost increases. The businesses performing best are those that actively monitor: Debtor collection times Inventory levels Business debt levels Capital expenditure decisions Tax and superannuation obligations Strong cash flow management is becoming a greater competitive advantage than ever before. 2. The Compliance Environment Is Tightening The Australian Taxation Office continues to increase its focus on data matching and compliance activities. Areas attracting attention include: Trust distributions Division 7A loans Superannuation compliance GST reporting Property and capital gains transactions Business versus private expenditure claims Many business owners are surprised by how quickly information is now shared between government agencies, banks and regulators. Our advice remains simple: Good record keeping has never been more important. The cost of addressing compliance issues after the event is almost always higher than investing in quality systems and advice upfront. 3. Superannuation Is Becoming More Important One of the most significant changes affecting employers is the continuing evolution of superannuation obligations. Industry commentary during EOFY 2026 has focused heavily on the upcoming Payday Super regime, alongside increased employer super obligations and payroll system readiness from 1 July 2026. [wealthworks.com.au] , [aimsaustralia.com.au] , [moula.com.au] For business owners, superannuation should no longer be viewed solely as a compliance matter. It is increasingly becoming a strategic tool for: Tax planning Retirement funding Intergenerational wealth transfer Succession planning Asset protection For successful farming families and private business owners, the ability to move wealth into the superannuation environment often remains one of the most effective long-term planning opportunities available. Looking Ahead No one can accurately predict weather patterns, interest rates or global markets. What we can control are the fundamentals. The most successful businesses in regional Victoria continue to focus on: ✅ Understanding their financial position ✅ Managing cash flow carefully ✅ Investing in people and systems ✅ Reviewing structures regularly ✅ Planning for succession early ✅ Seeking advice before decisions become problems Businesses that plan proactively almost always have more options than those that wait until issues arise. The start of a new financial year is an ideal time to step back, review where your business is heading, and ensure your structure, finances and strategy remain aligned with your long-term objectives.
From 1 July 2026 , new anti-money laundering (AML) and counter‑terrorism financing (CTF) laws will apply to many accounting firms across Australia. While this is primarily a compliance change for us as your adviser, you will notice some changes in how we work with you. This article explains what’s happening and what it means in practical terms. What’s changing? The Australian Government is expanding its AML/CTF laws (known as “Tranche 2 reforms”) to include professions like accountants, lawyers and real estate agents. Previously, these rules mainly applied to banks and financial institutions. From July 2026, many accounting firms will also be regulated by AUSTRAC (the government financial intelligence agency). These changes are designed to: · Reduce fraud, tax evasion and financial crime · Bring Australia in line with international standards · Close gaps where advisers may unknowingly be used to move or disguise funds Why this matters for your business As your accountant, if we provide certain services (such as setting up companies or trusts, managing funds, or assisting with ASIC transactions), we must now follow strict compliance procedures. This means you may be asked for additional information or documentation. What you can expect to change More identity checks (‘Know Your Client’) We will need to verify your identity and, in some cases, the identity of related parties (e.g. directors, shareholders or beneficiaries). This may involve: · Providing photo ID · Confirming ownership structures · Updating details periodically Even long‑standing clients may be required to complete this process. Additional questions about your business activities We may ask further questions to better understand: · What your business does · Where funds come from · The purpose of certain transactions These are part of our obligations to assess the risk of financial crime. More documentation requests Depending on the service, we may request documents such as: · Contracts or transaction details · Source of funds evidence ● Trust deeds or company records, if we don’t already hold these This is a standard requirement under the new laws. Timing of work may be affected Some services cannot commence until required checks are completed. To avoid delays, we recommend: · Responding promptly to information requests ● Providing complete documentation upfront Ongoing monitoring (in some cases) For certain engagements, we may be required to: · Periodically update your information ● Review transactions or changes in your structure What won’t change Importantly: · Our role as your trusted adviser remains the same · Your information remains confidential and secure ● We will only request what is required under law Why this is ultimately a good thing While these changes will add some extra steps, they are aimed at: · Protecting legitimate businesses like yours · Strengthening the integrity of Australia's financial system · Reducing fraud and misuse of business structures In short, it helps ensure a fairer and safer business environment for everyone. What you need to do now There’s nothing you need to action immediately, but over the coming months you can: · Expect some new onboarding or update requests · Ensure your business records and ID documents are readily available ● Let us know of any changes to your structure or ownership We’re here to help We understand these changes may feel like “more paperwork”, particularly for long‑term clients. Our goal is to make this process as smooth and practical as possible while meeting our legal obligations. If you have any questions about how these changes apply to your business, please feel free to get in touch.
For many Australians, a holiday home offers the best of both worlds — personal enjoyment and short‑term rental income through platforms like Airbnb or Stayz. However, recent draft guidance from the Australian Taxation Office (ATO) suggests that owners need to take a closer look at how these properties are treated for tax purposes. The ATO’s latest guidance makes it clear that earning some rental income does not automatically mean a property qualifies for full tax deductions . Instead, the focus is on whether the property is genuinely operated as an income‑producing investment or whether it is primarily a lifestyle asset. Investment Property or Lifestyle Asset? While all rental income must be declared, the ATO may restrict expense deductions where a property is mainly used for private purposes and only rented when convenient. If a property is classified as a holiday home rather than a genuine rental property, deductions for expenses such as interest, council rates, land tax, insurance and general maintenance may be denied. In many cases, owners may only be able to claim limited, direct costs associated with specific guest stays, such as cleaning or advertising. What Will Attract ATO Attention? The ATO is particularly focused on properties that: Are unavailable for rent during peak periods such as school holidays Are advertised inconsistently or priced above market rates Generate ongoing tax losses year after year Are clearly prioritised for personal use over rental income While no single factor is decisive, these patterns can indicate that the property is not being run on a commercial basis. Apportionment and Records Matter Where a property qualifies as income‑producing but is used partly for private purposes, expenses must be apportioned fairly and reasonably. Good records are critical, including booking calendars, listings, rental enquiries and notes of private use. The ATO can access booking platform data and readily cross‑check claims. What Should Owners Do Now? Although the draft guidance is proposed to apply from 1 July 2026, now is the time to review your position. Owners should consider whether their property is genuinely operated to maximise rental income, whether pricing reflects market conditions and whether their record‑keeping would stand up to scrutiny. Final Takeaway The ATO isn’t banning deductions for holiday homes, but it is taking a firmer approach to distinguishing investment properties from lifestyle assets. A proactive review now can help avoid unexpected tax outcomes later. If you own a holiday property and are unsure where you stand, a proactive review could help protect your position and improve your tax outcome. Please contact us if you would like assistance assessing your current arrangements.
