As a parent, you probably want to boost your child’s chances of achieving wealth and security in life, and topping up their super might have crossed your mind. But is this allowed? And what if your child doesn’t even have a super account yet? We explore some of these questions below.

Can I set up a super account for my child if they’re not working?

Even if your child hasn’t entered the workforce, current super rules don’t prevent them from setting up a superannuation account.

That said, whether or not your child can join a particular fund will depend on that fund’s governing rules, so you may need to do some research before deciding on one.

Once you find a fund that does accept minors, you’ll have to fill out all the usual new member paperwork on your child’s behalf (as minors are generally not able to sign contracts). A Tax File Number will also need to be set up for them, otherwise your child’s fund will not be able to accept any personal contributions.¹

If your child is working, they can receive contributions from their employer, but there are certain conditions. Under current rules, employers are only obligated to pay super to workers under 18 if they work more than 30 hours per week.² Once they turn 18, however, their boss will have to pay super regardless of how many hours they work.

Can I make a contribution to my child’s super account?

The good news is there aren’t any restrictions on contributing to your child’s super. You just won’t be able to claim any tax offsets like you might when making a super contribution on behalf of a low-income earning spouse. You also won’t be able to claim a tax deduction for the contributions.

But even if you don’t reap any direct benefit, your child is bound to be grateful for the help (if not now then when they’re older). With several decades for compound interest to work its magic, these early contributions have the potential to make a major difference to your child’s wealth later in life.

Are there any downsides to contributing to my child’s super?

It’s worth remembering that super is intended to be a long-term savings vehicle, and access is typically restricted until someone turns 60 or meets another condition of release. That means if the goal is to help your child early in life — say, to purchase a home or pay for uni — there might be other, more suitable ways to go about it.

Some options include:

• Helping your child to set up an investment account if they are over 18 (punitive tax rates apply if they are still a minor)
• Setting up an informal trust if they are under 18
• Investing the money in your own name and giving it to your child later
• Making extra contributions to your own super and giving the money to your child when you retire
• Setting up a family discretionary trust (this is typically an option for families with significant wealth)

There’s also no substitute for teaching your child about money and the importance of saving and investing for their future. You might have luck demystifying these concepts through regular family discussions or by simply modelling good financial habits in your own life. Money needs a good shepherd, and the sooner your child learns this, the sooner they can develop the financial habits that will serve them later on in life.

Sources

1 Australian Taxation Office
2 Australian Taxation Office