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Savings tax break too complex

10/10/2011

Banks are complaining that the government’s new 50 per cent tax discount on interest earnings of up to $500 will require too much paperwork from households that only stand to make a small gain.

Lenders also say the $500 cap - which will rise to $1000 in 2012-13 - is too low to give people a strong incentive to put more of their savings into interest-bearing assets.

Under the scheme, Treasury has suggested the tax break would apply only to net interest income, after any costs from earning the interest have been subtracted.

The Australian Bankers' Association (ABA) said forcing households to calculate net interest income would present them with a “compliance minefield”. The majority of people would not incur significant expenses in earning interest, the association said.

Source: The Age



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