This isn't quite true anymore, but it is the closest approximation of the truth I think that would make sense to a small child.
It is true! It's just not the full explanation. Follow up talks should include how bitcoin is created, how transactions are confirmed, etc.
The only comment I'd remove is this one...
With ordinary money the government can easily tell how much money you have and how much money you should pay the government, because that money is in a bank.
The government can subpoena bank records but you make it sound like it's regular course of business. No government is looking at my bank account, and if they are they aren't telling me how much money to pay in taxes - i need to calculate that number on my own! Taxes and bank records are separate things.
You're on to a good start here!