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Savings in Australian Banks

Savings in Australian Banks

Old Jan 27th 2003, 4:57 pm
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Question Savings in Australian Banks

I see that it’s possible to get 5% interest on savings in Australia. How is this interest taxed, is it deducted at source and if so how much, or do you have to declare it on your tax return at the end of the financial year? I am assuming that the funds belong to a PR with a tax file number.
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Old Jan 27th 2003, 7:30 pm
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I think interest will be deducted unless you provide a Tax File Number. I don't think you are obligated to provide a TFN. Yes the interest has to be declared on the tax return.

If in doubt consult a tax consultant
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Old Jan 27th 2003, 11:15 pm
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Default Re: Savings in Australian Banks

Originally posted by lorrimer
I see that it’s possible to get 5% interest on savings in Australia. How is this interest taxed, is it deducted at source and if so how much, or do you have to declare it on your tax return at the end of the financial year? I am assuming that the funds belong to a PR with a tax file number.
Thanks
Its taxed at your top rate of income tax and must be declared on your tax return. Bear in mind that any UK interest must also be declared and once you are a tax resident here it will also be subject to Australian tax. For us this meant that the UK tax authorities got 40% of our interest and then the Australian authorities collected an additional 7% to take the total tax on interest up to 47%. Does'nt matter where your income comes from, it will be taxed at Australian rates once you are resident here.
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Old Jan 27th 2003, 11:43 pm
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Default Re: Savings in Australian Banks

Originally posted by lorrimer
I see that it’s possible to get 5% interest on savings in Australia. How is this interest taxed, is it deducted at source and if so how much, or do you have to declare it on your tax return at the end of the financial year? I am assuming that the funds belong to a PR with a tax file number.
Thanks
Perhaps you can consider setting up your own superannuation fund or using a public trust fund for super. The taxes are 15% of contributions from your wages and 15% of earnings within the fund. Money you contribute which you have saved after paying tax is free of contribution tax - it is "Preserved" in the jargon. Of course, super ties up your money until you retire.
 
Old Jan 28th 2003, 12:02 am
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Default Re: Savings in Australian Banks

Herman,

As a matter of interest (if you'll pardon the pun) why did the UK authorities tax you at all? Didn't you cease to be resident and ordinarily resident in the UK?

Most who leave the UK permanently can apply for their UK-source interest to be paid on a gross basis.

Best regards.



Originally posted by Herman
Its taxed at your top rate of income tax and must be declared on your tax return. Bear in mind that any UK interest must also be declared and once you are a tax resident here it will also be subject to Australian tax. For us this meant that the UK tax authorities got 40% of our interest and then the Australian authorities collected an additional 7% to take the total tax on interest up to 47%. Does'nt matter where your income comes from, it will be taxed at Australian rates once you are resident here.
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Old Jan 28th 2003, 12:45 am
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Default Re: Savings in Australian Banks

Originally posted by Alan Collett
Herman,

As a matter of interest (if you'll pardon the pun) why did the UK authorities tax you at all? Didn't you cease to be resident and ordinarily resident in the UK?

Most who leave the UK permanently can apply for their UK-source interest to be paid on a gross basis.

Best regards.
I have one of these accounts where the interest is paid once a year and despite my having submitted the gross interest election form, the tax was still deducted at source in the UK.
My tax is fairly complicated as I'm on an agreed net of tax salary (my UK after tax salary), paid partly by the UK and partly by the Australian firm but all received by me in pounds. Some fairly tricky tax equalisation calcs and notional tax gross ups are involved. Essentially I think the agreement is that I have a UK component of salary, which is taxed at UK rates, then an Australian componenet of salary, which is taxed at Australian rates, then the UK firm calculates how much tax in total has been deducted from my total gross salary and compensate me to make sure I am no worse off than if it had all been subject to UK tax. I believe that they are then entitled to make some kind of claim against the Australian tax authorities against the Australian tax paid, although I am not privy to those details.
Similarly, my UK source investment income in taxed in the UK, then in Australia at a top up to the Australian top rate of tax, and the UK tax authorities must rebate the tax deducted back to Australia. So in essence I pay UK rates on my salary and Australian rates on my investment income, with lots of messing about by my firm and the tax authorities in between gross and net.
Luckily our tax dept take care of all that for me and I just trust them and sign on the dotted line. Tax is all too complicated for us corporate finance boys!
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