What are the requirements for opening a bank account for kids?

Opening a bank account in your child’s name can help them learn how to save money and budget for big purchases. But minors will need a parent as a joint account holder.

Documentation needed to open a bank account for your kids

Opening a bank account for your child is easy, but you will need to supply a few important pieces of documentation before your kid can start making deposits. What documents you’ll need may vary from bank to bank, but will likely include some combination of:

• Your child’s photo ID (like a passport)
• Your photo ID
• Both you and your child’s social insurance numbers
• Your child’s birth certificate
• Proof of address

What is a kids bank account?

A kid’s bank account works pretty much the same as an adult’s bank account, but a parent will need to be listed as a joint account owner. Your child can make deposits and withdrawals into and from their account, and they can earn interest on money kept in a savings account. If they’re opening a chequing account, they’ll likely have a lower spending limit on their debit card, and some banks will allow you to track their purchases online.

Children’s bank accounts generally won’t charge any ongoing monthly fees, but you should always check with your bank to make sure.

Can I open a kids account online?

It depends on the bank. While some banks will let you open an account online, others will require you to visit your nearest branch in-person to prove your identity.

If you’re able to open an account online, you may be asked to upload photos proving yours and your child’s identity.

How to compare accounts

There are several factors you should consider when comparing children’s bank accounts, including:

• The minimum age. Some accounts require that your child be a minimum age in order to open the account on their own. If they’re too young, you’ll have to be listed on the account with them.
• What happens to the account when your child becomes adult-age. In most cases, your financial institution will automatically convert your child’s account to an adult account once they become of age. Make sure you know what that new account is going to be so you can prepare for any new account fees and transaction restrictions.
• The interest rate. With a high interest rate, your child’s money can grow with them. Shop around to make sure you’re getting a competitive rate. Consider online banks, as they often offer higher interest rates than brick and mortar banks.
• Ongoing account-keeping fees. Ideally, the account you chose would have no monthly account fees – your child’s contributions shouldn’t get sucked up by fees. Thankfully, most banks don’t charge ongoing fees for children’s accounts.
• Withdrawal fees and any other hidden fees. Check for other charges like withdrawal, transfer and ATM fees.
• Whether a debit card is provided. Banks don’t usually provide debit cards to children, even if they are listed on the account. Banks that do offer debit cards to children, will often also have built in security measures like debit limits or notifications when you child makes certain purchases.
• Minimum and maximum balance requirements. Some banks require that you have a certain balance to the account or to receive interest. Accounts can also have a cap on the amount you can save.

What kind of kids bank accounts are available?

There are both savings and chequing accounts available for children, though chequing accounts tend to have a higher minimum age. Many banks offer savings accounts for children of any age, including accounts for babies.

You can also open an account that your kid won’t have access to until they come of age, which is usually 18 or 19, depending on your province or territory. A custodial account allows you to continue adding money as your kid grows up so that they can use it to pay for college or any other expense when they’re older.

Are there any tax implications to opening a bank account for a child?

Yes, there can be tax implications for any unearned income, including interest, dividends and capital gains. How taxes work will depend on what type of account you’re setting up.

• Savings accounts. If your child makes more than the “basic personal amount” ($12,069 in 2019) of income in a year, including interest and dividends, they may need to pay taxes.
• Custodial accounts. Similarly, if a UGMA or UTMA account makes more than the basic personal amount in interest in a year, the account holder will likely need to pay taxes.
• Trust funds. The taxation guidelines can vary based on the size of the trust, fluctuating tax laws and who the beneficiary is. If you’re considering setting up a trust fund, talk with your accountant to learn more about how it’ll be taxed.

Are there any other tax implications of opening a kid’s bank account?

If your child’s income is unearned from a split income arrangement it will be subject to what is referred to as the “kiddie tax.” For example, if your child receives money from dividends payed out by a company owned by their parents, they will most likely have to pay a kiddie tax. This kiddie tax applies to children under 18 years old. The exact tax rate depends on a variety of factors. Generally, the kiddie tax is the highest combination of federal and provincial/territorial rates. For 2019, that rate could even reach 54%. It cannot be combined with many other tax deductions, including the basic personal amount, to reduce the rate.

Who declares income from a child’s bank account?

It depends. If they make more than the basic personal amount ($12,069 in 2019) and other unearned income, the child will need to file an income tax return — or you’ll need to file one in their name. If they make less than the basic personal amount in a year, it may not be necessary. You can still either file in your child’s name or report it on your own income taxes. Both can be filed using a T1 return.

Gifting money to a child’s account

Canada does not have gift tax, so any money you give to your children as a cash gift cannot be taxed as income for your children. It also cannot be deducted as an expense for you.

Compare joint bank accounts

While you can open a children’s bank account, a joint bank account offers many of the same features. These accounts allow you to open a single account and share access with someone else (or sometimes multiple people). This means you can access, spend, monitor and control spending and saving.

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Bottom line

Kids bank accounts are offered by a wide range of Canadian banks and credit unions. Opening an account with your current financial institution can help save time, but it’s worth shopping around to see which account offers the best interest rates and features. Compare children’s bank accounts to find one that’s the right fit.

Frequently asked questions

• What happens to my kid's bank account when they turn 18?

  Most banks will let them roll their account balance over into an independent adult account, but it can vary from institution to institution. Check with your bank to learn more.

• Can I withdraw money from my child's bank account?

  It depends. Most joint accounts will let you add and withdraw money, but custodial accounts won’t. In order to withdraw from a custodial account, you may need to prove that you’re using it to pay for something on behalf of the child, such as college tuition.

• At what age can my child have a debit card?

  It depends on the bank. Some banks will let minors as young as 14 get a debit card — but a parent’s name will be on the account.