I found you through the web and wonder if you can help me please.

I have a query from a UK client who wishes to make regular monthly investments for grandchildren living in Australia.



Had the grandchildren been living in UK, he would simply open an investment account designated in the name of each grandchild and by doing so would have created a bare trust. The interest or dividends would be deemed to belong to the grandchild and have been covered by the grandchild’s personal tax allowances (even though they are minors) and the tax deducted would be recoverable by the grandchild. The same goes for capital gains tax. At age 18 the grandchild becomes legally entitled to the funds. This doesn’t work for gifts from parents.



Is there a similar tax position in Australia? I have printed off pages from www.ato.gov.au relating to children’s share investments which suggests that the UK procedures can be replicated in Australia and without the creation of a bare trust. Example two seems relevant but with the funds coming from the UK based grandparent and not the Australian based parent. It might however be that the grandparent sends money to the parent for him/her to invest for the grandchild. At what age does a child cease to become a child and have legal access to the funds please? Is there any advantage to a bare trust being created in Australia ? Is it important to identify the funds as having originated from the grandparent?
Any help would be appreciated.
Kind regards.