Unit trust account for newborn

[dunkyd]

Which equity funds have the lowest opening deposits required.
Gramps wants to start something for first grandaughter

 

[DapperDanMan]

Unit Trusts were "replaced" by ETFs for good reasons ...

 

[NarrowBandFtw]

as in lump sum or monthly deposits?

while the lump sum requirements tend to be high most have a low monthly minimum e.g. Allan Gray wants a R50k minimum lump sum, but will take R1k monthly instead

10x claims to have the lowest fees etc and have a R5k lump sum minimum, or R1k monthly instead

although as the post above states, these days ETFs are more popular and have no real limits while having generally lower fees, so you could just go to:

EasyETFs

Invest in ETFs in South Africa. Exchange Traded Funds. Compare ETFs on the JSE. Top performing ETF in South Africa

etfs.easyequities.co.za

 

[lord-of-war]

Do Easy Equities or Sygnia ETF’s.

 

[zerocool2009]

ETF’s are very cheap.
Advice : Open up an easyEquities account. Pump R1000 in satrix top40

As easy as that

 

[Tomtomtom]

You should open a TFSA in her name.

Most investments in a child's name are taxed in your hands, but a TFSA is great for the kiddies - they get their own tax-free compounding growth from year 0 and its a separate allowance from your own.

 

[Speedster]

You should open a TFSA in her name.

Most investments in a child's name are taxed in your hands, but a TFSA is great for the kiddies - they get their own tax-free compounding growth from year 0 and its a separate allowance from your own.

This would be my suggestion too

 

[Kornhub]

Maybe look at sygnia too

 

[delta66]

ETF’s are very cheap.
Advice : Open up an easyEquities account. Pump R1000 in satrix top40

As easy as that

what about S&P500? worth a shot

 

[zerocool2009]

what about S&P500? worth a shot

You can do that as well! . (I personally have that in my investment strategy)

 

[newby_investor]

You should open a TFSA in her name.

Most investments in a child's name are taxed in your hands, but a TFSA is great for the kiddies - they get their own tax-free compounding growth from year 0 and its a separate allowance from your own.

Huh?

 

[GrootVoet]

You should open a TFSA in her name.

Most investments in a child's name are taxed in your hands, but a TFSA is great for the kiddies - they get their own tax-free compounding growth from year 0 and its a separate allowance from your own.

Listen to the man. S&P500 TAFSA.

 

[Tomtomtom]

Huh?

Taxability of the income of minor children

The Law Section 68. Income and capital gain of married persons and minor children.?(1) Any? (a) income received by or accrued to or in favour of any person married in or out of community of propert…

www.sataxguide.co.za

(3) (a) Every parent shall be required to include in his return—

(i) any income received by or accrued to or in favour of any of that parent’s minor children either directly or indirectly from that parent;

So it might be different if the gift is not from the parent, but still, this is a schlep and a potential minefield which is presumably why TFSAs are so popular for kids. Fire and forget.

 

[newby_investor]

Taxability of the income of minor children

The Law Section 68. Income and capital gain of married persons and minor children.?(1) Any? (a) income received by or accrued to or in favour of any person married in or out of community of propert…

www.sataxguide.co.za

So it might be different if the gift is not from the parent, but still, this is a schlep and a potential minefield which is presumably why TFSAs are so popular for kids. Fire and forget.

Hmmm. The legalese here is tricky for me to read. But having the income declared on your tax return (and correctly categorised) and actually paying tax on it are different things. Remember you need to declare TFSA contributions as well.

I'd have to consult with my accountant next time I see her to ask about that. I've currently only got TFSAs for my kids, if I start making enough money that this isn't sufficient, then I'll worry more about it then though.

 

[Tomtomtom]

having the income declared on your tax return (and correctly categorised) and actually paying tax on it are different things.

Well it goes on,

A taxpayer is liable for the payment of tax on any income which has been received by or accrued to or in favour of any minor children if such income arises from a donation, settlement, or other disposition by –
(i) the taxpayer; or
(ii) any other person, if the taxpayer made a donation, settlement or gave some consideration directly or indirectly in favour of the other person or his family.

It makes sense - if it weren't for this rule then you could legally transfer assets to your child's name, pay the donations tax once-off and enjoy tax-free returns for 18 years.

I think (ii) above is supposed to prevent "laundering" donations via grandparents or whatever. A difficult one to enforce I'm sure...

Anyway, the TFSA avoids these sticky issues for a better night's sleep.

 

[HumanShield]

You should open a TFSA in her name.

Most investments in a child's name are taxed in your hands, but a TFSA is great for the kiddies - they get their own tax-free compounding growth from year 0 and its a separate allowance from your own.

Excellent idea. You're done by the time the kid is 15. Makes a brilliant gift for a 18 year old.

 

[newby_investor]

Well it goes on,



It makes sense - if it weren't for this rule then you could legally transfer assets to your child's name, pay the donations tax once-off and enjoy tax-free returns for 18 years.

I think (ii) above is supposed to prevent "laundering" donations via grandparents or whatever. A difficult one to enforce I'm sure...

Anyway, the TFSA avoids these sticky issues for a better night's sleep.

I mean it seems unreasonable to tax Tiny Tim's income at the same rate at the same marginal rate as Uncle Scrooge's income. But then I also wouldn't put it past them. I'll request clarification next time I chat to my accountant, and will report back.

 

[Speedster]

Well it goes on,



It makes sense - if it weren't for this rule then you could legally transfer assets to your child's name, pay the donations tax once-off and enjoy tax-free returns for 18 years.

I think (ii) above is supposed to prevent "laundering" donations via grandparents or whatever. A difficult one to enforce I'm sure...

Anyway, the TFSA avoids these sticky issues for a better night's sleep.

I think you might be reading that wrong. This is referring to paying income earned by a parent to a child in order to avoid tax on that income.

 

[Tomtomtom]

I think you might be reading that wrong. This is referring to paying income earned by a parent to a child in order to avoid tax on that income.

Your scenario is just straight up underdeclaration of the parent's income - a simpler tax fraud.

This is about transferring income-generating assets to the child that then give rise to income: "if such income arises from a donation". The donation itself is not the income.

Another interpretation: https://www.exceed.co.za/does-section-7-of-the-income-tax-act-form-part-of-your-annual-tax-planning/

2. The taxpayer transfers an investment to his minor children. He pays the donations tax (if the donation exceeds R100,000) but the child is taxed at a lower tax rate. Again, section 7(3) deems these profits to be taxed in the hands of the taxpayer.

 

[Tomtomtom]

I mean it seems unreasonable to tax Tiny Tim's income at the same rate at the same marginal rate as Uncle Scrooge's income.

Remember this only applies to income due to the parent's donation (direct or laundered via someone else!)

If the child actually works (imagine that!) or earns income from a bona fide donation or inheritance from e.g. a grandparent (as in OP's case) then that's the child's income.

Then if the child's income goes over the tax threshold (~R96k) the parent is obligated to register the child and file returns.

First-world problems though.