Interest tax discount junked

08/09/2010

The planned discount of 50 per cent on interest on the first $1000 of interest earned on deposits will be put off for one year to help fund additional government spending in regional Australia. The deferral, until 2012/13, is one measure affecting the banking industry flowing from the agreement reached between the new minority Labor government and two of three independent members of the House of Representatives needed to prop up the government for a second term.

A fourth cross bench MP, a member of the Greens, is also providing support for the government. The decision is yet to be formally announced. The reduced tax for savers will apply to interest earned from deposits with banks, credit unions and building societies, as well as bonds, debentures and annuities. It is one of the few measures arising from the taxation review adopted as policy by the Labor government.

Source: The Australian/Banking Day