Golden Rules: What Parents Need to Know About Tax and Your Child’s Money
Helping your child grow their savings is like polishing gold—done right, it shines brighter over time. But did you know the Australian Taxation Office (ATO) could have a claim on your child’s bank interest or investment earnings?
Whether your child earns income from a part-time job, collects interest on a savings account, or receives dividends, it’s important to understand how tax works for minors. Here’s what every parent should know.
Why Tax Can Apply to Children’s Money
Under Australian tax law, a “minor” is anyone under 18 years old at the end of the financial year. Special tax rates apply to most of their income unless it falls into specific exceptions.
These tax rates aim to prevent adults from shifting investments to children to reduce tax.
For the 2024–25 year:
$0–$416: No tax
$417–$1,307: Taxed at 66% of the amount over $416
Over $1,307: Taxed at 45% of the entire amount
📊 Note: Minors generally can’t claim the Low Income Tax Offset (LITO) on unearned income, so the effective tax-free limit remains $416.
Some income types are treated more favourably. Known as “excepted income,” these amounts are taxed at normal adult rates. That means your child may access the full $18,200 tax-free threshold, just like adults.
Excepted income includes:
Wages and other work income
Centrelink pensions and certain benefits
Income from a deceased estate or disability trust
Income from a family trust (under specific conditions)
If your child earns only excepted income, they’re also eligible to claim offsets like LITO.
Children’s savings accounts can earn interest without tax being withheld—but only if their Tax File Number (TFN) or date of birth is provided to the bank.
For account holders under 16 years old, the thresholds are:
Interest under $120/year: No tax withheld
$120–$420/year: No tax withheld if the bank has your child’s TFN or DOB
Over $420/year: If no TFN is provided, tax is withheld at 47%
🚨 Dividends are treated differently. The $420 threshold applies only to bank interest, not to dividends from shares. If your child receives dividend income, even small amounts can trigger the need for a tax return.
This depends on who the ATO considers the true beneficial owner of the money.
If you provide the funds, control how they’re used, or spend the income, it’s your income—and must be declared on your return.
If the child is the genuine owner, and:
Their non-excepted income (like bank interest or dividends) is over $416, or
Tax was withheld from their income (e.g. no TFN provided), or
They receive dividends, and total income from those exceeds $416
—then a tax return should be lodged in their name.
You can claim refunds of any overpaid tax or franking credits on their behalf.
Watch Out for Joint Accounts
If a savings account is jointly held with a parent or someone aged 16 or over, the ATO will not apply the special under‑16 interest thresholds. In these cases, the full interest may be taxed differently, and TFN withholding may apply immediately unless managed carefully.
Help Your Child Build Wealth—Without Tax Surprises
Your child’s financial journey is like a gold mine—it’s best managed with care, guidance, and the right tools. Teaching them how tax works is a golden opportunity to build strong money habits early.
At DJ Grigg Financial, we help families across the Latrobe Valley manage tax obligations and set up accounts the right way—from TFN applications to minor tax returns.
Get in touch today and let us help you give your child a golden financial future.
Turn Stress into Gold: Why ACTION is the Best Cure for Overwhelm at Work
Stress is a natural part of work and life. But when it lingers without action, it turns into something heavier—like carrying a load of bricks you can’t put down. For business owners and employees alike, stress often comes from uncertainty or the fear of doing something wrong.
But here’s the good news: stress is most intense right before you take action.
“Stress and worry tend to be higher before you act. Without action, all you can do is worry. Once you begin, fear shrinks as you start to influence the outcome.” – productivity expert James Clear says.
Let’s explore why action is your most powerful stress-buster—and how taking small steps can turn pressure into progress.
Why Stress Hits So Hard
According to the Australian Bureau of Statistics’National Study of Mental Health and Wellbeing (2020–2022), one in five Australians experienced high or very high psychological distress in the last year. Work-related stress is one of the key contributors, especially for small business owners and employees under pressure to perform.
Stress builds when you feel stuck or unsure. Without a clear next step, your brain starts imagining worst-case scenarios. That’s when anxiety peaks. But once you act, even in a small way, the cloud begins to lift.
Action Turns Pressure into Progress
Think of stress as molten metal—intense and formless. But when shaped by action, it becomes something strong and valuable—like gold.
Taking action doesn’t mean solving everything at once. It means doing something that moves you forward. Here’s why it works:
It creates clarity: Even small actions reduce confusion and show the path ahead.
It builds control: Action gives you influence over the outcome.
It lowers anxiety: You’re no longer frozen—you’re making progress.
It gives you confidence: Success breeds momentum, even in small wins.
“When we take action aligned with our values and goals, we move from helplessness to hope.” – Dr Suzy Green, Founder of The Positivity Institute.
Start Small. Shine Bright.
You don’t need a full strategy or a perfect plan. All you need is your first step. Here are a few “golden” moves that can help right now:
Make a brain-dump list: Get worries out of your head and onto paper.
Prioritise the next task: Focus on the one thing that matters most today.
Set a timer for 10 minutes: Get started. Action beats perfection.
Talk to someone you trust: A mentor or adviser can provide perspective.
Outsource or delegate: You don’t have to do everything alone.
Why It’s Worth Doing Something New
The quote often attributed to Thomas Jefferson still rings true:
“If you want something you’ve never had, you have to do something you’ve never done.”
If stress is your body’s alarm system, action is how you respond. Sitting still only lets the alarm ring louder. But movement, even small, tells your brain: “I’m doing something about this.”
Build Your Resilience Bank
Every action you take to reduce stress is like adding a gold coin to your resilience bank. Over time, you’ll build confidence, capability, and calm—even when challenges arise.
Remember: stress doesn’t always mean something is wrong. Sometimes, it just means something needs your attention.
Time to Take That First Step
If you’re a business owner or employee feeling overwhelmed, don’t wait for the “right” time to act. The time is now.
At DJ Grigg Financial, we help business owners take smart, practical steps to reduce stress—whether it’s managing tax time, fixing cash flow, or getting clarity on your numbers. We understand that sometimes the hardest part is just getting started.
Golden takeaway: The weight of stress lightens the moment you start moving. Even one small action can turn fear into forward motion. Let’s help you make that move.
Golden Decision: Take Your Accrued Leave or Cash It Out?
As retirement draws closer, many Australians find themselves with a growing balance of accrued annual leave. You’ve earned it—but should you take the leave for a well-earned break, or cash it out when you retire?
The answer depends on several factors, including superannuation, tax, and social security impacts. Let’s break it down clearly, accurately, and in a way that helps you make the best choice for your golden years.
What Is Accrued Leave?
Accrued leave is paid annual leave that you’ve earned but haven’t yet used. You can either:
Take time off before retiring and get paid as usual, or
Retire and receive the accrued leave as a lump sum payment.
While both options might seem equally appealing, they come with different financial outcomes—some of which may surprise you.
Superannuation: A Golden Opportunity Missed?
When you take accrued leave as holidays, your employer is legally required to pay superannuation guarantee (SG) contributions on that income. This is because it’s classed as ordinary time earnings (OTE) under super law.
However, if you cash out accrued leave on retirement, your employer does not have to pay any super on that lump sum. It’s not considered OTE.
✅ Verified by the ATO: “Payments for unused annual leave on termination of employment are not ordinary time earnings.” Source: ATO – List of payments that are OTE
So, if you’re looking to boost your super before retiring, taking the leave as paid time off could help grow your retirement nest egg—plus you’ll enjoy the break!
The Work Test: A Golden Rule for Older Workers
If you’re aged 67 to 75 and planning to contribute to super after retiring, you need to meet the “work test” to claim a tax deduction on those contributions.
The test requires that you work 40 hours in any consecutive 30-day period during the same financial year you make the contribution.
Here’s the catch: if you’re on paid leave, that counts as work. By taking your accrued leave into the next financial year, you may be able to satisfy the work test and make a deductible super contribution even after finishing active work duties.
There’s also a work test exemption. If your total super balance is under $300,000, and you met the work test in the previous financial year, you may still contribute for an extra year—even if you’re not working.
Lump sum leave payments are taxed in the year you receive them. These payments are not taxed as part of Employment Termination Payments (ETPs), but separately as “Lump Sum A” income. While concessional tax rates may apply, your total tax bill depends on:
How much you receive, and
What other income you earned that year.
By taking leave and retiring in the next financial year, you may reduce your taxable income and potentially fall into a lower tax bracket.
How you use the lump sum matters too. Spending it on exempt assets (like home renovations) may help you stay under the limit.
Weighing Up Your Options
Factor
Take the Leave
Take the Lump Sum Payment
Superannuation
Employer contributes SG
No SG paid
Tax
Income spread across years possible
May be taxed at higher marginal rate
Age Pension Impact
Treated as income while working
Counts as an asset
Work Test Eligibility
Can help meet test if timed well
May miss test if not working
A Final Word of Gold-Plated Advice
Choosing between a paid holiday or a cash payout isn’t just about lifestyle—it has real financial implications.
Before you make your decision, talk to a qualified adviser. A little planning now could leave you with more in your pocket—and more peace of mind—when your working days are behind you.
What To Do When Someone Dies – A Clear Guide to Handling Tax Affairs
When someone close to you dies, grief isn’t the only thing you’ll have to manage. If you’re named as the person responsible for their estate, there’s also tax to consider. The process may feel daunting, but with the right steps and guidance, you can handle it with care and confidence.
This article outlines what to do when you’re tasked with managing someone’s tax matters after their passing, using the latest information from the Australian Taxation Office (ATO).
Step One: Understand Your Role as Legal Personal Representative (LPR)
If you’re named the executor in the will, or appointed as the administrator by a court (when there’s no will), you’re considered the deceased’s Legal Personal Representative (LPR).
The ATO requires proof before you can act on the deceased’s behalf. You must provide:
A copy of the death certificate
A grant of probate (if there’s a will)
Or letters of administration (if there isn’t a will)
👉 You cannot access tax records or manage affairs until the ATO recognises you as the LPR. Learn more: Notifying the ATO of a death
Step Two: Lodge the Final Tax Return (“Date of Death” Return)
You must lodge a final tax return if the deceased:
Earned income above the tax-free threshold,
Had tax withheld,
Or had outstanding tax obligations.
This final return is known as the “date of death return.” It includes income earned from 1 July of the relevant financial year up to the date of death.
🔍 Tip: If the deceased was not required to lodge a return, you still need to submit a Non-lodgment advice form to the ATO.
Confirm whether previous years’ tax returns are outstanding
Lodge any that are overdue
Settle all tax debts
⚠️ Important: As the LPR, you can be held personally liable for unpaid tax if you distribute estate assets before all tax is settled. Learn more: Confirming tax obligations are complete
Step Four: Business and ABN Considerations
Did the deceased operate a business or hold an ABN?
If so, you may also need to:
Lodge the final Business Activity Statement (BAS)
Pay outstanding GST, PAYG or income tax
Cancel their ABN and any tax registrations
💼 For sole traders and business partners, there may also be capital gains tax (CGT) on the sale or transfer of business assets. This is a good time to consult a registered tax or legal advisor.
Settling a deceased estate is not a fast process. It can take 6–12 months, or more for complex estates.
The timeline depends on:
Whether probate or letters of administration are required
Whether the deceased had a business or foreign assets
Any disputes among beneficiaries
How quickly tax and legal requirements are met
Don’t Go It Alone
“Handling someone’s tax affairs after death can feel overwhelming. But with expert help, you don’t need to do it alone.”
Taking over someone’s financial legacy is a serious responsibility, but it’s one you don’t have to shoulder by yourself. Like unearthing gold, it takes time and care—but the value of doing it right is lasting.
If you’ve recently lost a loved one and need guidance managing their tax affairs, we’re here to help. DJ Grigg Financial has experience supporting families across Latrobe Valley and beyond through this process with clarity and compassion.
📞 Call us today or visit our website to schedule a confidential consultation.
Turning Skills into Real Gold: Understanding Personal Services Income (PSI)
If you’re a sole trader or run a business built around your personal skills—like IT, design, or consulting—Personal Services Income (PSI) could affect how your income is taxed. And if you don’t understand the rules, you could miss out on valid deductions or get hit with an unexpected tax bill.
Here’s what you need to know to stay compliant and strike gold with smart planning.
What Is Personal Services Income (PSI)?
According to the Australian Taxation Office (ATO), PSI is income that’s mainly a reward for your personal effort or skills—not from selling goods or the use of assets. If more than 50% of the income you earn from a contract is for your personal work or know-how, it’s likely PSI. Source: ATO – What is PSI?
PSI doesn’t apply to employees. But if you operate as a sole trader, company, partnership or trust, the rules could apply—making your business a Personal Services Entity (PSE).
Why Does PSI Matter?
If PSI rules apply to your income:
You may have to attribute the income to yourself personally, even if earned through a company or trust.
Some common business deductions may be disallowed, such as rent or mortgage interest on a home workspace.
You may not be able to split the income with family members or other entities.
It’s important to note that PSI rules do not change your legal status as a contractor or business operator—but they do affect how your income is taxed. Source: ATO – PSI and your tax obligations
How Can You Avoid PSI Rules?
If you can show that your business qualifies as a Personal Services Business (PSB), the PSI rules won’t apply. To do this, you need to pass at least one of four tests set by the ATO:
1. The Results Test
You’re paid to achieve a specific result, not just for your time. You use your own tools and fix mistakes at your own cost.
2. Unrelated Clients Test
You earn income from two or more unrelated clients and actively market your services to the public.
3. Employment Test
You employ or contract others (not just family or associates) who complete at least 20% of the main work.
4. Business Premises Test
You operate from dedicated business premises that are physically separate from your home and client locations.
But there’s a twist: If 80% or more of your PSI in a financial year comes from one client (and their associates), you must pass the Results Test or apply to the ATO for a PSB determination to avoid PSI rules. Source: ATO – PSB and the 80% rule
What Deductions Are Limited Under PSI?
If PSI rules apply, the ATO limits the deductions you can claim. For example:
You generally cannot claim rent, mortgage interest, or rates if working from a home office.
Payments to associates for admin or support services are also disallowed in most cases.
Not sure if your income is PSI? The ATO has an online PSI Decision Tool to help you work it out. Try it here →
We also recommend keeping clear records of your contracts, clients, marketing efforts, and work structure. These can help support your position if the ATO reviews your status.
Strike Gold with Confidence—Get Expert Help
Working hard should be rewarding. Don’t let PSI rules catch you off guard.
At DJ Grigg Financial, we help small businesses and contractors:
Assess if their income is PSI
Navigate the four PSB tests
Structure their operations for tax effectiveness
Maximise legitimate deductions
Let’s make sure your hard-earned income stays in your pocket, not lost in tax confusion.
Contact us today for a personalised PSI assessment. We’ll ensure you are claiming the maximum allowable deductions and being taxed correctly.
