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Here is a great idea for a gift for your child.

If your child is working, even part time they can gain an extra $1,000 in to their superannuation.  It can be done every year that they are eligible.

It is an outstanding opportunity that has the potential to affect the retirement benefit of your child.  By simply investing $1,000 in your working child's superannuation fund, he or she can be eligible to receive a Government Co-contribution (the maximum co-contributions is $1,000).  An investment of $2,000 at this time in your child's life will make an enormous difference to their end balance.

Consider this example:

Your 18 year old son or daughter works part-time.  You gift them $1,000 (or part) to contribute to a superannuation fund in their name and as a result, the Government contributes an additional $1,000 after they lodge their tax return.  Your child has $2,000 to invest.  By the time they are 60, based on growth of 8% after fees and taxes, these funds alone would be valued at $50,680.  If you did this over 3 years and invested a total of $3,000 for your child, the approximate balance at age 60 would be $139,380.

This example illustrates the power of compound interest.  We all know that the earlier we save, the more we have.  The co-contribution scheme enables you to show your child the benefits of beginning a saving strategy early.

How do you arrange the contribution?

If your child's employer is already contributing to superannuation, your child could make a personal contribution to this fund or if they do not have their own fund, we could assist in setting one up.  This fund would be free of entry fees and entry commissions.

The basic criteria

Your child has employment income, their annual income is ideally below $31,920, but you are still eligible for a partial benefit at $61,920 and a tax return is lodged.  The super will notify the tax office, and then the tax office will check that you meet the criteria and send the contribution to the super fund.

Even if you aren't inclined or unable to contribute the full $1,000, part is still worthwhile.  Act well before June 30^th to ensure that your child starts benefiting this year!