Question on superannuation for children

[wylie]

My mum saw something on Sunrise about contributing $1000 to a superannuation account for a child and the government will contribute $2000. Apparently this can be done each year until the child reaches 20. I think they said that if done, even if the child doesn't add to it after reaching age 20, it would be worth $500K when they retire.

Does anyone know anything about this. I will see what I can find out but thought someone may already know.

Thanks, Wylie

 

[Raddles]

http://law.ato.gov.au/atolaw/view.htm?DocID=NEM/EM200221/NAT/ATO/00007

Children under 18 may also be able to take advantage of the Government's largesse, even if they only have a summer holiday job, provided they receive the super guarantee and make a personal contribution to a complying fund. Grandma could even gift $1000 into her enterprising grandchild's bank account, so the child can make a personal contribution and receive the maximum co-contribution.

The Tax Office automatically calculates how much co-contribution you should receive once it receives your tax return and confirmation of your super contributions from your super fund or retirement savings account. The money will then be paid into your super account.

To be eligible you must be under 71 and derive at least 10 per cent of your income as an employee.

 

[WASP]

My mum saw something on Sunrise about contributing $1000 to a superannuation account for a child and the government will contribute $2000. Apparently this can be done each year until the child reaches 20. I think they said that if done, even if the child doesn't add to it after reaching age 20, it would be worth $500K when they retire.

Does anyone know anything about this. I will see what I can find out but thought someone may already know.

Thanks, Wylie

I tried Google and the Sunrise Show but couldn't find any mention of this, the ATO site posted above didn't clarify thinks much either ??

Sounds interesting though!

 

[Raddles]

HI there
the point of the above ATO site is that it contemplates that there can be contributions for children
but there is no co-contribution unless those children are employed, make a payment for super etc

 

[wylie]

I found the entry on the Sunrise show but it is pretty vague (although on re-reading I found it does mention kids working part-time).

http://au.blogs.yahoo.com/davidkoch/27/review-of-the-budget-07

I plan to look into it further and will post anything I find.

Wylie

 

[alexlee]

Even assuming you can, Wylie, and I know it's free money, but it also locks the money in for at least until your kids are 60? Put it this way, if your kids end up investing on their own that money will mean nothing (and they would be better served having that money for deposits or something).
Alex

 

[bort]

Even assuming you can, Wylie, and I know it's free money, but it also locks the money in for at least until your kids are 60? Put it this way, if your kids end up investing on their own that money will mean nothing (and they would be better served having that money for deposits or something).
Alex

that would be assuming they have an investor mindset .... if they don't i would have thought a 200% instant return invested in a concessionally taxed area over the long term is probably not a bad idea .... admittedly they cant get to it for such a long time, but for some people that is probably a good thing

 

[Mr. Fabulous]

that would be assuming they have an investor mindset ....

if someone has an unvestor mindset and their chldren grow up without one, they haven't done their job properly.

Mark

 

[geoffw]

if someone has an unvestor mindset and their chldren grow up without one, they haven't done their job properly.

First thought. An "unvestor" is one of the great majority who do not invest

Second thought. You can try to teach your children everything. But they will not learn unless they want. "Horse to water".

I would be careful too about telling parents how they have or have not done their job properly as well. Especially if you haven't been there yourself.

 

[abcdiamond]

I wondered the same when I saw the Sunrise program, and recalled that previously an eligible person needed to be an employee. Even self employed did not qualify.

I cannot see that the rules have changed.

http://qsuper.qld.gov.au/public/members/your_qsuper_options/making_contributions/co-contribution.asp
Who is eligible for the super co-contribution?
To be eligible you must:

• make personal super contributions (providing they are not salary sacrifice contributions, and you are not entitled to claim a tax deduction for your personal super contributions);
• have an assessable income (and reportable fringe benefits) of less than $58,000;
• work for an employer during the financial year;
• be less than age 71 at the end of the financial year;
• not be wholly or substantially self-employed;
• not be a temporary resident; and
• lodge a tax return.

If anyone knows that the rules have changed please let me know

It also (did not/does not) apply to contributions a person makes in respect of their spouse.

From 2007/2008 I think that self employed will be allowed to qualify.