Announcements
The JobKeeper Payment scheme finished on 28 March 2021. Find out what this means for your business.

ATO Community

Tax on term deposit income

Newbie

Views 2253

Replies 4

Hi all, looking forward for some guidance and insight on the following case; I did open a term deposit (7 month) with an OZ bank a while ago, however I would need to understand whether the income generated from this deposit is taxable? Given the fact that I don't live or work in Australia and I only hold a PR. Is there any rule that says, if the annual income from a term deposit is less than a certain value then I don't have to pay any tax?

 

I don't have a TFN number yet as I'm planning to apply for one once I'm back to Australia permanently, how shall I deal with this case?

 

THX!

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Certified Response

Community Support

Replies 0

Hi @markmaarrawy,

 

Welcome to our Community!

 

Further to the information provided by @macfanboy, if you're a foreign resident and earn interest from an Australian financial institution, they will generally withhold tax of 10%. You can find the general tax rate for interest earned to foreign residents on our website.

 

At the end of the financial year we'll issue you a Notice of withholding tax that outlines how much interest you've earned in your Australian bank account and how much tax was withheld. You won't need to declare this information in an Australian tax return.

 

As we can provide general information here on our Community and we don't know all the details about your situation you may wish to phone us from overseas on + 61 2 6216 1111 between 8am - 5pm, Monday to Friday and let the operator know you're calling from overseas and request a call back.

 

Thanks, JodieH.

4 REPLIES 4

Taxicorn

Replies 1

What do you mean by PR? (Permanant Resident?)

 

First you need to determine wether you are an australian resident for tax purposes:

 

https://www.ato.gov.au/individuals/international-tax-for-individuals/work-out-your-tax-residency/

 

The other issues are that without a Tax File Number provided the Bank can withhold 47% (or 45% if foreign rsident) of the interest (income). You can apply to the bank to have this paid back in the same financial year once you have a TFN or if not when you complete a tax return.

 

Aslo read this https://www.ato.gov.au/Individuals/International-tax-for-individuals/Coming-to-Australia/Paying-tax-...

 

 

 

Newbie

Replies 0

Hi,

 

Appreciate your reply. Indeed a Permanant Resident.

 

I went through the provided link, which I believe it identified me as a non-resident for Australian Tax Purposes since I'm not living in Australia and currently residing overseas.

 

As for mentioned tax on the income (interest), is there a way to inform the bank of my tax situation? what alternatives do I have? Is there a way to avoid getting taxed while aborad prior coming back to Australia permanantly? If not, let's say I come back to Australia after 2 years, can I claim back the tax?

 

THX!

Taxicorn

Replies 0

sorry double post

Most helpful response

ATO Certified Response

Community Support

Replies 0

Hi @markmaarrawy,

 

Welcome to our Community!

 

Further to the information provided by @macfanboy, if you're a foreign resident and earn interest from an Australian financial institution, they will generally withhold tax of 10%. You can find the general tax rate for interest earned to foreign residents on our website.

 

At the end of the financial year we'll issue you a Notice of withholding tax that outlines how much interest you've earned in your Australian bank account and how much tax was withheld. You won't need to declare this information in an Australian tax return.

 

As we can provide general information here on our Community and we don't know all the details about your situation you may wish to phone us from overseas on + 61 2 6216 1111 between 8am - 5pm, Monday to Friday and let the operator know you're calling from overseas and request a call back.

 

Thanks, JodieH.