In the 2010-11 Budget, the Federal government released a discussion paper that should lead to a future 50% tax discount on Interest Income.
Aimed at giving relief to low and middle income earners, Assistant Treasurer Bill Shorten claims the discount will benefit up to five million everyday Australians.
Set for introduction in the 2012-2013 financial year, taxpayers will pay 50% less tax on any Interest income received up to $500. In the 2013-2014 financial year, this figure will rise to $1000.
To be eligible to receive this discounted tax rate you simply need to have received interest from any deposits held with banks, building societies or credit unions as well as annuities, debentures or bonds during the preceding financial year.
How will this change benefit me?
Currently, any interest you earn is classified as income by the ATO and therefore added onto your annual earnings for tax purposes. Under these changes, you’ll receive a tax rebate of 50% on interest earned up to $500.
For example if you were an average income earner who earns $500 worth of Interest during the financial year, currently you would pay $160 worth of tax on that interest. Under the proposed changes, this figure would be halved saving you $80. And, with the increase the following year, your savings could also double to maximum of $160.
If you are unsure about anything to do with the amount of tax you pay on Interest Income, please don’t hesitate to contact us. Our qualified Tax Accountants are extremely knowledgeable on everything tax related and can offer you highly valuable tax saving advice.