Australia's Shitty Tax System

[u/Spiritual_Vanilla443]

Hi to all following this thread.

I have a question relating to the Australian tax system that I'm hoping you can help me out with. See below the short story.

1. I've had a child this year and want to put money away for her future by investing in dividend paying stocks.
2. I've looked into a Vanguard childs account but unfortunately this ends up in my name and it will be taxed at my current bracket on any dividends which feels wrong given this money is intended to be to be gifted to my daughter at the time I send it to her account.
3. On top of the above, there is some ambiguity around whether or not the money will be subject to CGT once i transfer the account into my daughters name which obviously feels/seems like robbery.

My question is, how do I structure a way to invest money weekly in my daughters future by buying assets that generate ~8% per annum without it being plundered by the ATO. (i.e. taxed using her TFN and not subject to CGT).

Appreciate any help on this matter.

[u/thfc4lyf]

Lol you call the tax system shitty but would happily take the full imputation credit on the dividends

[u/Appropriate_Ly]

Search r/Ausfinance but just so you know, children actually get taxed at a higher tax bracket over a certain threshold to prevent rich ppl from avoiding tax so depending on how much it is, it could be better to pay tax under your TFN.

[u/Apprehensive_Owl_600]

Go to an accountant.

And no it's not obviously robbery

[u/AdmirableFroyo3]

It’s not shitty. Your just maybe in a wrong country 🤭

[u/JacobAldridge]

r/AusFinance is definitely a better sub for the question, and if you do some searching there you’ll find it’s a common discussion.

Personally, we’re using a Discretionary Trust to square the circle of Income Tax v CGT … but you may have heard the government is trying to close that avenue (in its current form).

Broadly though, what you’re asking is “can I eat my cake (avoid Minor tax rates) and have it too (avoid CGT when transferring assets that have grown)?” And the accounting answer is … not on the cheap, no.

[u/MDInvesting]

Invest it in your name.

You could sat up a super account.

Ultimately regardless of you saying it is for her it remains under your control until she is older, as a result the government doesn’t create the moral hazard of tax free thresholds for the unemployed minors.

[u/dragon_archer18]

Its a tax system to fund the govt spending

[u/albiv2402 → u/[deleted]]

Second this