How to declare minor children’s income
This depends on who the Australian Taxation Office considers the owner of the income
.
If you (the parent or guardian) provide the funds, control how they’re used and spend the earnings, that income is generally considered yours and should be declared on your tax return.
Your child may need a separate tax return if:
- the income’s genuinely theirs and tax has been withheld (e.g. from bank interest or dividends because no TFN was provided), and you want to claim a refund;
- for share income specifically, if your child owns the shares and their dividend income (plus any other income that needs to be declared) is more than $416 for the year, a tax return must be lodged on their behalf. Even if it’s $416 or less, a return can be lodged to claim refunds of tax withheld or franking credits, which can result in a tax refund, and
- generally, if their total “non-excepted income” (income subject to the higher minor tax rates) exceeds $416, a return is needed.
An important question is “what is the original source of the money.” Managing your child’s financial beginnings and helping them learn to handle their money is an important process. Understanding these tax aspects can help ensure everything’s set up for them correctly.
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