Grand-kids in Oz?
The following question was recently directed at the Daily Mail’s Moneydoctor.
When my first grandchild was born almost 5 years ago, my son opened a high savings account for her and ever since I have been paying £10 a month into that account. Hopefully that will mount up over the years, especially as she will not be paying tax on the interest for some time.
Last December my second grandchild was born and I would like to do the same for her. However, she lives in Australia, so what would be the best way to get money into an account for her?
Geraint Davies of IFA Montfort International, which specialises in advice for people going to live or work in Australia, advises:
It is risky to send currency through the post and the cost of converting £10 a throw into Australian dollars will eat into most if not all of the gift.
One practical solution is to open an account here for her and let the £10 a month grow here into a more sizable sum that you can then remit to Australia. Alternatively, offer to pay any UK accounts for your own child and ask them to pay the amount in A$ into your grandchild's account.
Any grandparent in your situation should remember that their grandchild, as a permanent resident in Australia, is also a tax resident and this needs to be factored in either if sending money or indeed setting up a UK account in trust for him or her.
The applicable tax rate at the moment is a zero rate up to A$416pa, followed by a band up to A$1307pa where the rate is 66%. The effect of averaging brings this up to 45% on the total interest earned, which the rate for income over A$1307.
When my first grandchild was born almost 5 years ago, my son opened a high savings account for her and ever since I have been paying £10 a month into that account. Hopefully that will mount up over the years, especially as she will not be paying tax on the interest for some time.
Last December my second grandchild was born and I would like to do the same for her. However, she lives in Australia, so what would be the best way to get money into an account for her?
Geraint Davies of IFA Montfort International, which specialises in advice for people going to live or work in Australia, advises:
It is risky to send currency through the post and the cost of converting £10 a throw into Australian dollars will eat into most if not all of the gift.
One practical solution is to open an account here for her and let the £10 a month grow here into a more sizable sum that you can then remit to Australia. Alternatively, offer to pay any UK accounts for your own child and ask them to pay the amount in A$ into your grandchild's account.
Any grandparent in your situation should remember that their grandchild, as a permanent resident in Australia, is also a tax resident and this needs to be factored in either if sending money or indeed setting up a UK account in trust for him or her.
The applicable tax rate at the moment is a zero rate up to A$416pa, followed by a band up to A$1307pa where the rate is 66%. The effect of averaging brings this up to 45% on the total interest earned, which the rate for income over A$1307.
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