Contributed by: Naomi Smith, Tax Partner at Nexia Australia
The income tax payable on the income of a minor (an individual aged under 18) is subject to special rules. These rules were introduced to discourage income-splitting by diverting income to children, but are not confined to situations where income-splitting is involved.
Under these rules, 'unearned income' of minors over a certain level is taxed at the highest marginal rate of tax. The rules apply to income (including capital gains) derived by a minor directly or through a trust. If the minor is an Australian tax resident, the special rules do not apply if the relevant income is AUD 416 or less.
Tax rates for Australian tax resident
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Web page updated on 28 Aug 2024 11:42