What You Need to Know About Your Childs Super

As a parent, you want to set your child up for financial success, and contributing to their superannuation might seem like a smart move. But can you actually contribute to your child’s super? What if they don’t even have a super account yet? Let’s explore these questions in more detail.

Can I Set Up a Super Account for My Child if They’re Not Working?

Even if your child isn’t working, they can still have a superannuation account. Current super rules don’t prevent minors from setting up a super account, but whether a specific fund will accept them can vary. You’ll need to do some research to find a super fund that allows minors as members.

Once you find a suitable fund, you’ll need to fill out the necessary paperwork on your child’s behalf since minors usually cannot sign contracts. It’s also important to ensure that your child has a Tax File Number (TFN), as their super fund won’t be able to accept personal contributions without one.

If your child is working, they can start receiving employer contributions to their super. However, employers are only obligated to make super contributions for workers under 18 if they work more than 30 hours per week. Once your child turns 18, their employer must pay super regardless of how many hours they work.

Can I Make a Contribution to My Child’s Super Account?

Yes, you can contribute to your child’s super account, and there are no restrictions on doing so. However, you won’t be able to claim tax offsets like you might when contributing to a low-income earning spouse’s super, nor will you be eligible for a tax deduction for these contributions.

But even without immediate tax benefits, the contributions you make to your child’s super can have a significant impact over time. With decades for compound interest to accumulate, these early contributions can help build a solid financial foundation for your child’s future.

Are There Any Downsides to Contributing to My Child’s Super?

While contributing to your child’s super is a great long-term strategy, it’s important to remember that superannuation is a long-term savings vehicle. Generally, your child won’t be able to access these funds until they turn 60 or meet another condition of release. So, if your goal is to help your child with financial needs earlier in life—such as purchasing a home or funding education—there might be more suitable alternatives.

Here are some options to consider:

- Investment Account: If your child is over 18, help them set up an investment account. Be aware that punitive tax rates apply if they’re still a minor.

- Informal Trust: Set up an informal trust if your child is under 18, allowing you to manage investments on their behalf until they come of age.

- Invest in Your Own Name: Invest in your own name and gift the funds to your child later, perhaps when they’re ready to buy a home or start a business.

- Contribute to Your Super: Make extra contributions to your own super and pass the money on to your child when you retire.

- Family Discretionary Trust: Consider setting up a family discretionary trust, particularly if you have significant wealth, to manage and distribute assets in a tax-effective way.

Teaching Your Child Financial Literacy

While contributing to your child’s super is a proactive step, there’s no substitute for teaching them about money management. Helping your child understand the importance of saving, investing, and financial responsibility is one of the most valuable gifts you can give. Regular family discussions about money, setting financial goals together, and modelling good financial habits in your own life can set your child on the path to financial independence.

By taking these steps, you’re not just boosting your child’s super balance; you’re equipping them with the knowledge and skills to navigate their financial future with confidence.

Book a complimentary call with the Life Sumo Team to get personalised advice based on your circumstances.

This provides general educational information only. The content does not take into account your personal objectives, financial situation, or needs. You should consider taking financial advice tailored to your personal circumstances. Life Sumo (Orion Enterprises (Cairns) Pty Ltd) has representatives that are authorised to provide personal financial advice.