Savings Accounts for Education

Wednesday September 2, 2009

Savings accounts for education accounts are quickly progressing as one of the most popular reasons for opening an account. Education in Australia is quickly growing in its expense with many parents now thinking ahead and preparing for the children's future education.

Education savings accounts or savings plans have also become highly attractive due to the associated tax benefits and Government incentives, designed to encourage people to commit to building a healthy education savings account. Essentially, savings accounts for educational purposes can have attractive tax advantages and work as ';scholarship plans' under tax laws.

To explain further, when a person opens an educational savings account or savings plan, they are viewed as tax paid investments. This means that the tax on earnings paid are completed at the fund manager level, usually with a maximum rate of 30 per cent. The savings account owner does not have to enter these earnings in the educational savings accounts on their tax return as long as the investment remains within the savings plan.

However, the taxation office will require that all funds from any educational saving accounts must be used for eligible education expenses.

These eligible educational expenses refer to any costs associated with the following:

• Any school fees for primary, secondary and tertiary education
• Extends to pre-school, TAFE and international education institutions
• Educational expenses for children with disabilities including intellectual, learning and physical

Much like most regular savings accounts, making contributions can either be regular monthly deposits organised through an automatic system from a person's salary or can simply be sporadic lump sum payments, depending on what suits the savings accounts owner.

Education saving plans offer many benefits with the tax advantages through the government's education saving plan. Of course, there are negatives with educational savings accounts to counteract these tax benefits, including higher fees than most other savings accounts.

Although with proper homework and sticking with a clear investment plan, an educational savings account may prove highly beneficial. Use SavingsAccounts.com.au comparison tables today and find the right account for you.

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