Tax On Minor's Investment Account

[srothman]

So when our minion was born, we set up an investment account for him, specifically a Money on Call account with FNB. We gave the account details to the family, and they gifted him birthday and Christmas gifts there instead of buying stuff.

Anyways, my question has to do with the tax associated with this account, if we were to make withdrawals from this account. How will tax be handled? Will I be liable for this the tax on this? It is linked to my online banking profile, so for example, transfers from his account to mine.

Scenario:

I transfer R30K from his account to my account to settle school fee or whatever.

Who pays what?

 

[ITCynic]

So when our minion was born, we set up an investment account for him, specifically a Money on Call account with FNB. We gave the account details to the family, and they gifted him birthday and Christmas gifts there instead of buying stuff.

Anyways, my question has to do with the tax associated with this account, if we were to make withdrawals from this account. How will tax be handled? Will I be liable for this the tax on this? It is linked to my online banking profile, so for example, transfers from his account to mine.

Scenario:

I transfer R30K from his account to my account to settle school fee or whatever.

Who pays what?

If your youngster did not earn the money and it was all gifts I would suggest you research "donations tax" on SARS website.

 

[srothman]

If your youngster did not earn the money and it was all gifts I would suggest you research "donations tax" on SARS website.

Awesome, thanks, will check it out.

 

[scudsucker]

If it was you who was "giving" the money to the account, and you who is paying the money to the school, I doubt SARS will care; you will be liable.

 

[SauRoNZA]

Was the account in his name?

You do say it's linked to your internet banking.

Then anything up to R23600 (or similar number) in interest annually is tax free.

Anything under R100k transferred would be donations and tax free as well.

 

[srothman]

Was the account in his name?

You do say it's linked to your internet banking.

Then anything up to R23600 (or similar number) in interest annually is tax free.

Anything under R100k transferred would be donations and tax free as well.

The account is in his name, although linked to my internet banking profile for visibility and management, so I pretty much see it as one of my own accounts.

The current value is around R200K and the deposits are in drips and drabs, anything from a couple hundred bucks to R25K.

I don't mind the rest, just need to know what and how much to declare when the time comes.

 

[SauRoNZA]

The account is in his name, although linked to my internet banking profile for visibility and management, so I pretty much see it as one of my own accounts.

The current value is around R200K and the deposits are in drips and drabs, anything from a couple hundred bucks to R25K.

I don't mind the rest, just need to know what and how much to declare when the time comes.

Then you should be just under the interest exemption still.

When it gets to 250k or so (check when you’d hit the interest wall of RR23800 and come in well before that) start pumping the interest into a TFSA annually also in his name.

Then it can be equities based too.

Until then you wouldn’t need to declare anything.

And even if left there it should then start falling under regular income tax which has its own requirements for when to declare. But don’t quote me on that.

http://www.sars.gov.za/Tax-Rates/Income-Tax/Pages/Interest-and-Dividends.aspx

 

[srothman]

Then you should be just under the interest exemption still.

When it gets to 250k or so (check when you’d hit the interest wall of RR23800 and come in well before that) start pumping the interest into a TFSA annually also in his name.

Then it can be equities based too.

Until then you wouldn’t need to declare anything.

And even if left there it should then start falling under regular income tax which has its own requirements for when to declare. But don’t quote me on that.

http://www.sars.gov.za/Tax-Rates/Income-Tax/Pages/Interest-and-Dividends.aspx

Awesome, thanks.

Yeah we started doing the TFSA for the last two years, and it works well. I was more concerned about when I decide to move money out, but I suppose moving it out of the TFSA instead of the MOC account would solve that problem in any case

Thanks for the advice.

 

[SauRoNZA]

Awesome, thanks.

Yeah we started doing the TFSA for the last two years, and it works well. I was more concerned about when I decide to move money out, but I suppose moving it out of the TFSA instead of the MOC account would solve that problem in any case

Thanks for the advice.

You’d want to leave the TFSA alone as long as possible as you can’t really put money back once you’ve hit the limits.

Which is why I say try to keep under the interest threshold for your withdrawal to fund what needs funding and then move the test into the TFSA.

It would require a bit of annual planning but it means you can remain tax free.

 

[srothman]

You’d want to leave the TFSA alone as long as possible as you can’t really put money back once you’ve hit the limits.

Which is why I say try to keep under the interest threshold for your withdrawal to fund what needs funding and then move the test into the TFSA.

It would require a bit of annual planning but it means you can remain tax free.

Thanks a mill