| Children?s Bank Accounts and Tax File Numbers |
| If no tax file number (TFN) is provided when opening a bank account for a child, what will be the result? |
It is reasonably common for parents and sometimes grandparents to want to open a bank account/savings account for a child, who is a minor. That bank account is typically operated by the parent/grandparent, as trustee for the child/grandchild, by means of an informal trust.
The Australian Taxation Office (ATO) is satisfied if the parents/grandparents TFN is quoted.
If there is a formal trust (document), there is probably a TFN application and that TFN is the one quoted to the bank.
Another alterative is that the parent/grandparent choses not to quote any TFN. Withholding tax will be deducted when the interest is more than $102 for the year.
Whilst this first option might satisfy bank and ATO expectations, the disadvantage is that the ATO income matching process is more than likely to result in an audit adjustment later, because the interest received has not been declared.
Often the best option is to apply for a TFN for the minor, then quote that number and avoid any possible repercussions or complications.
10th-June-2005 |
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