As the domestic stock market continues a record-setting rally, the number of securities accounts opened under minors' names has also surged. The increase appears driven by demand to secure tax-free benefits through early gifting amid a bull market. Under current tax law, when parents gift an asset to a minor child, gift tax is exempt up to 20 million won every 10 years.
The number of minor accounts opened at three firms—Korea Investment & Securities Co., Mirae Asset Securities, and Shinhan Investment & Securities—reached 34,590 in December last year, nearly triple the 11,873 in January. At these brokerages, the number of minor accounts plunged in March last year, then increased in line with the rising stock market trend.
By month, the uptrend in account openings became pronounced after the KOSPI crossed the 3,000 mark at the end of June. The number of minor accounts opened through the three securities firms rose from 10,580 in June to 13,925 in July and 16,912 in August, dipped slightly to 16,750 in September, then continued to increase to 29,933 in October, 31,989 in November, and 34,590 in December.
As share prices jumped sharply, more parents began buying stocks for their young children and drawing up gifting plans. They open a stock account in the child's name and steadily purchase blue chips.
In particular, the gift tax base is limited to the market price at the time of the gift, so no additional tax is imposed on valuation gains from investing in stocks and other assets through a securities account thereafter. As a result, a method is circulating among investors to open an account in a child's name, transfer an asset, and then enjoy the compounding effect from long-term investing tax-free.
Tax accountant Kim Han-min of Hanmin Tax Accounting said, "Minor children receive a tax exemption benefit up to 20 million won every 10 years, and adult children receive the benefit up to 50 million won," adding, "Because only the market price at the time of the gift is used as the tax base, there is no tax burden on gains generated later from stock investments."
For this reason, there are even cases of opening an account in a newborn's name and transferring an asset. A securities industry official said, "There are quite a few cases where gifting begins when the child is very young to maximize the tax-free limit."
Earlier, in 2023, the Financial Services Commission revised its guidelines to allow guardians to open minors' accounts remotely via smartphone without visiting a branch. A brokerage official added, "Improved accessibility and convenience also appear to have contributed to the increase in minor account openings."