I'm looking at setting my child up with an ABN as a sole trader but I can't find any guidance on age requirement. Any pointers?
Can a minor even legally sign a contract, can I do it on my child's behalf without ownership of the business?
I want to become a bit more informed before seeking professional advice.
Cheers
Not true for at least two reasons I can think of straight off the top of my head.
Can a minor buy something at a store? Because that's a contract right there.
You are also wrong for so so so many reasons.
A contract can be formed without signing something as well.
Wrong. This falls under Duty of Care which means every person in Australia has a duty of care to everyone. If you find a bug in your can of drink, you can sue for a lack of duty of care inlieue of a contract. On my iPad in my business law subject, apologies for the spelling and grammar errors.
Source: case study from Understanding Business Law 5th edition.
Oh, Dagmar. I think you need to put down your iPad and pay attention.
I love this law student mentality of applying whatever the most recent case they've learnt, to the case at hand. In this instance, the ridiculously famous Donoghue v Stevenson "snail in the bottle of ginger beer" case.
every person in Australia has a duty of care to everyone
Please, Dagmar - please. This is so wrong it hurts me. Do you think we live in a world of unlimited liability? Probably should finish the "Negligence" chapter.
inlieue
Inter alia, if you are to partake in the act of using legal language, including, but not limited to, the language of "legalese" and/or "mumbo-jumbo", and forsee that this act may result in third parties reading, or being read, your legal language, your duty of care to said third parties obligates you to endeavour to ensure that your grammar is correct and free from error.
@Dagmar:
I thought my point was pretty clear; please don't present something as fact when you do not actually know the facts. Duty of care is not relevant here, and your knowledge of it is flawed.
The case I referenced was indeed the one you named above. It may be an old case, but it was the case that set the precedent for duty of care. My knowledge is indeed limited, but not flawed. I do know the facts as I was responding to this:
Can a minor buy something at a store? Because that's a contract right there.
and NOT this:
ABN for minors
I'd appreciate if you didn't ridicule my studies. If I am wrong now or in the future, you can kindly correct me in order for me to get a better understanding instead of acting hostile like.
:EDIT: I'd rather discuss this with than go back and forth saying "you're wrong, no you're wrong, etc".
That is irrelevant to the point I was commenting on. Regardless, you're a few days late and both Johno and I have moved on.
A minor can sign a contract. They cannot, however, be bound by it.
That means that the counter party may be reluctant to agree to a minor to signing a contract.
But there is no reason a minor can't sign.
Did you read your link?
It says my comment is accurate except in a couple of edge cases (which do not apply here). What part of my comment do you feel is wrong?
Why do you want to set your child up with an ABN?
Minors pay a higher level of tax. Also remember their is tax minimisation and tax avoidance and sounds like you are seeking a tax avoidance path to go down.
Tax avoidance and tax minimisation is the same and both legal. Tax evasion isn't.
Err… Part 4A?
My other half currently provides a service to me that is a benefit sacrificed through my salary.
It's established legally by a qualified body and administered by a packaging company.
I'm now looking at extending this to my child.
So basically, fraud.
Your other half provides the service, not your child.
You've got the wrong impression.
I'd never risk the wellbeing of my family for money, I am only looking within the legal solution space for the current proposal.
@uncojoe:
No, I do not.
Please explain why your child needs an ABN for services that your wife provides.
My other half has no business or contractual involvement with the current proposal.
The activities i'm seeking are valid, I'm looking for the proper mechanism to apply it.
It isn't necessarily fraud, many companies do it.
They offer the wives positions within a company selling something to the office at a high rate.
Drew, please stop it with the witch hunt already.
I tried to be civil and not respond to you with the same level disrespect that you have shown towards me but your ignorance on the matter is taking you and others to go down the rabbit hole.
My other half currently provides a service to me that is a benefit sacrificed through my salary.
I don't wanna say what I'm thinking…
;)
It does sound like a typical marriage doesn't it?
Reads like a tax avoidance scheme. Bad enough your wife is involved. Using your child could just put you on the radar.
If I have misread I apologise and all the best to you and your industrious family.
Wait, since when did <18 pay more tax?
Under these rules, certain types of income, such as a distribution from a family trust, may be taxed at higher rates.
These rules were introduced to discourage adults from splitting their income and diverting it to their children.
https://www.ato.gov.au/Individuals/Investing/In-detail/Child…
Minors pay a higher rate on unearned income over $416.
Income from running a business or holding a job is taxed at normal rates:
https://www.ato.gov.au/individuals/investing/in-detail/child…
A minor can under common law sign a contract and can be held liable if the contract is related to their employment.
I got my ABN when I was 16 as a sole trader. Granted, and to be completely honest, it was an unwise decision as I didn't understand the tax implications of having an ABN at that age, and it took a long time to straighten things out when things got murky, so I do advise that you do educate your child on the responsibilities of having an ABN - especially activity statements.
As a sole trader, your child shouldn't have any problems to apply, as long as they have a valid TFN - set-up from the TFN school program or otherwise. You can apply for the ABN online and most likely, if everything is in order, you should be issued one almost immediately.
This applies only for sole trading - company registration is different, as company directors must be 18 or older. Also I have had problems with contracting and obtaining credit terms for my business before I turned 18, so do make sure you are making the right decision, whatever venture this is.
Thank you, our use of the ABN is different to yours but your story provided good insight.
What age are we looking at here?
If there is any actual age requirement, it'll be below that.
This is what I am trying to establish before seeking professional advice.
Your applying for an ABN, signing up for a credit card and booking a hotel in Tokyo.
What are you up to?
You're* signing up for NBN, wanting to choose your own number and selling a copy of Sims 4.
What are you up to, Terrance?
Oh and how's the home maintenance game going?
The jig is up…
It's a good old-fashioned OzBargain Upjig.
Reading between the lines what you appear to be doing seems dodgy enough to require serious professional advice.
I agree. This all reeks.
Not sure how the ATO is going to approve this, doesn't seem realistic that your child is going to conduct business related activities……
Subcontracting room cleaning and dish washing.
I registered an ABN for myself at the age of 17. There you go, finally a straightforward answer for you.
You run the risk of the ATO's ire.
If your child is legitimately providing a service to you for the object of financial gain they will likely be ok.
If your child is carrying on an enterprise for the sole purpose of reducing tax, you could have an issue.
So if your child is very young and there is a question about whether they can legitimately run the business, you might have an issue.
Thanks for the consideration, the first two points are non-issues.
The third point is something I'd like to know, which brings me back to my original question.
What I mean is, for example, if you employed your child to clean your rental properties, and they were 4 years old, the ATO would be likely to conclude this was not a legitimate business. Not whether there is a rule regarding registering an ABN.
So you should expect your child to be able to deal with ATO inquiries to them asking about details of their business operations. You won't be able to act on their behalf as you are effectively saying they are acting independently by starting a business.
Note also the ATO can determine that the business isn't valid and then it is up to you to demonstrate that they are wrong, the burden of proof is reversed compared to other laws.
EDIT: I should add, the ATO will be very happy to take your child's tax if they are running a legitimate business, they aren't there to be an obstacle. I think you got some people's backs up because one of your early comments wasn't "I want to help my child in starting their business" but about an arrangement to salary package to reduce tax. This makes the reader conclude your main motivation is to save tax, not to see your child become an entrepreneur.
I think the context of this question has got peoples noses out of joint:
"My son wants to set up a business so he can be awarded contracts through my partners business"
vs
"Can I do it on my child's behalf without ownership of the business" - which seems to imply the Child doesn't really want the business.
Other implications are that if the child ever wants (or needs) to receive Austudy (does that still exist) or unemployment benefits, I am pretty sure they are much more difficult or impossible to attain if you own a business, have business trading accounts, supplier contracts, bank accounts stuffed with cash etc.
You may be jeopardising your sons future legitimate welfare claims when he's struggling through uni and thereafter.
Most importantly - what does your child have to say about this?
IF you'd like to sign contracts, try to file emancipation.
Why don't you just tell us more details of the service your child provides? So we can better help you :)
aged 13 to 15 parent signs aged 16 + they can apply for abn on their own
No.