In the 2010-11 Budget, the Federal Labor Government released a discussion paper that would lead to a 50% tax discount on Interest Income.
Aimed at giving relief to low and middle income earners, Assistant Treasurer Bill Shorten claimed 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 for this discounted tax rate, you simply need to have received interest from any deposits held with banks, building societies or credit unions (also includes annuities, debentures or bonds) during the preceding financial year.
How will the change to Tax on Interest Income help me?
Currently, any interest you earn is viewed by the ATO as income and therefore, they add it to your annual earnings for tax purposes. That means more taxes for you.
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