Australians looking for a good reason to park their savings in a bank or mutual financial institution could have it if the government’s proposal to cut taxes on savings interest goes through.
The Federal Government released a discussion paper this week outlining its proposal to introduce a 50% tax discount for interest income.
According to Assistant Treasurer Bill Shorten, the scheme particularly benefits low- and middle-class savers who are more likely to put their money into financial institutions, rather than investments.
"The tax discount for interest income will improve incentives for individuals to put their money into interest-bearing savings accounts, reducing some of the discrepancies in tax treatment that currently exists between different investment and savings options. I encourage interested taxpayers and others to make submissions to the discussion paper," he said.
According to the proposal, in 2012-13, individuals will be entitled to a tax discount equal to 50 per cent on up to $500 of interest income received. From 1 July 2013, individuals will be entitled to a tax discount equal to 50 per cent on up to $1,000 of interest income received each year.
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