Know the rules

The first $416 of annual income for a child is tax-free, but the tax rate rises to 66 per cent for income between $416 and $1307, and 45 per cent for income above $1307. A person under 18 can’t technically open a share trading account, but a trust account in the name of the adult can be opened on behalf of the child, with the shares transferred when they turn 18.

Capital gains tax may apply when transferring the shares later, but this will depend on whose tax file number is linked to the minor account.

Parents should seek professional tax advice.