Children’s Savings Bank Account
Do your children have bank accounts and receive interest?
If so, do you know that the interest will need to be declared to the ATO?
When opening a bank account, normally the bank will ask for a Tax File Number (TFN) to be attached to the account. In most cases, a parent will supply their personal TFN as the child wouldn’t ordinarily have one. At the end of the year the bank will report the interest received to the ATO and advise it was earnt by the parent.
Before finalising the tax return however, you will need to determine who needs to declare the interest on the child’s savings account, whether it is the parent or the child. The ATO’s position is that it is the person who owns the money in the account who is the one who should be declaring the interest in their income tax return.
If a parent deposits their own funds into a child’s account and uses it as their own then the interest needs to be reported by the parent. The opposite scenario is a child who may deposit pocket money and gifts of cash into account, here the interest does not need to be reported by the parent. However, depending on the child’s circumstances, they may need to lodge their own income tax return.
Contact CrossCorp today if you have any questions about interest received on your children’s bank account.