Tax & Planning
January 12, 2025
MyInterestFinder Team
Term Deposit Tax Guide: What You Need to Know
Tax
Interest Income
Planning
ATO
How Term Deposit Interest Is Taxed
Interest earned on term deposits is classified as ordinary income and taxed at your marginal tax rate. This applies whether you receive interest monthly or at maturity.
When Is Interest Assessable?
The timing depends on your tax status:
- Individuals: Interest is taxable in the year it's received or credited
- At-maturity interest: Taxable in the financial year the term ends
- SMSFs: Taxed at 15% in accumulation, 0% in pension phase
- Companies: Taxed at corporate rate (25-30%)
Tax File Number (TFN)
Always provide your TFN to the institution:
- Without TFN: 47% withholding tax applies
- With TFN: No withholding, taxed at your marginal rate
- Non-residents: 10% withholding tax typically applies
Marginal Tax Rates (2024-25)
| Income | Tax Rate |
|---|---|
| $0 - $18,200 | 0% |
| $18,201 - $45,000 | 16% |
| $45,001 - $135,000 | 30% |
| $135,001 - $190,000 | 37% |
| $190,001+ | 45% |
Tax Planning Strategies
- Income splitting: Consider deposits in lower-earning spouse's name
- Timing maturities: Align with expected lower-income years
- SMSF: 15% tax (or 0% in pension phase) beats personal rates
- Children: Beware penalty rates on minors' unearned income
Record Keeping
Maintain records of:
- Interest received (institutions report to ATO)
- Term deposit certificates
- TFN declarations provided
Consult a tax professional for advice specific to your circumstances.