Hello,
I'm a foreigner living outside of Australia. I have an Australian bank account and I am looking to make some term deposit. My bank's online customer service can't answer some of my questions regarding taxation on interest payment, and they advised me to ask ATO / the ATO community directly. So here I am!
As far as I understand, for foreign residents living outside of AU, banks withhold tax on interest earned on term deposits at a constant rate of 10%, given that the foreign resident has provided the bank with their overseas address. Without an overseas address, the tax is withheld at 47%.
My first question is that, besides my overseas address, do I need to provide the bank with an Australian Tax file number (TFN) as well, for the tax-withheld rate to be 10% instead of 47%? Or is it that I don't need a TFN to get tax withheld at only 10%?
My second question is that, before which point should I provide the bank with my overseas address, for the tax-withheld rate to be 10%? Is it before the term deposit account is opened, or is it before the term deposit reaches maturity? I'm asking this because I'm using the Commonwealth bank, and adding an overseas contact address requires me to call their overseas customer service line, which usually takes more than 1 hour to wait in queue. I don't think I have time for this recently, but I would like to open the term deposit account (which I can do online) as soon as possible to lock in a high interest rate. I would like to know that if I provide CBA with an overseas address after I make the deposit, will the tax-withheld still be 10%?
Appreciate any help!
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