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Tax on interest


Guest sooperlids

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Guest sooperlids

Is tax on interest automatically deducted as it is in the UK? Thinking i may be better to move some money I have in an ISA to Australia before I arrive. Also is the interest rate linked directly to the base rate. Suprised NAB have a 2% saving rate (+bonus for 4 months) when the base rate is 2%. My UK bank dont offer anywhere near the 0.5% base rate.

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No, tax on interest is not automatically deducted in Australia, provided you have an Australian address on the account. If you have an address outside Australia, they'll deduct 10%

 

Tax will not be withheld provided you have supplied your Tax File Number to the Financial Institution.

If you haven't supplied your TFN then withholding tax at top marginal rate will be deducted from your account.

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Tax will not be withheld provided you have supplied your Tax File Number to the Financial Institution.

If you haven't supplied your TFN then withholding tax at top marginal rate will be deducted from your account.

 

Not what we have been told by our banks.

 

Here's what it says on the ATO website:

 

Bank accounts held by foreign residents

 

"Financial institutions automatically withhold tax from interest earned on accounts held by foreign residents.

If you've given the financial institution your overseas address, the tax will be withheld at the rate of 10%. Without your overseas address tax is withheld at 49%."

 

https://www.ato.gov.au/individuals/investing/investing-in-bank-accounts-and-income-bonds/

Of course, if you don't notify your bank of your change of address when you leave Australia, they're not going to know you've become a "foreign resident" so they won't withhold anything - but that would be illegal.

 

It doesn't affect us yet because we are still Australian residents for tax purposes and will probably remain so.

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