If you have any money in a bank account, more than likely you have earned an amount of interest on your money. This interest is required to be declared in your tax return as part of your Taxable Income for the year.
The ATO compares the amount you have declared with the amounts reported by the banks to the ATO directly. If there is a difference, they will adjust your income, and this usually happens many months after you have received your refund. This adjustment may result in tax to pay to the ATO and will include a penalty as well as interest to be paid.
Therefore, it is important to ensure all the amounts of interest earned are declared in your Income Tax Return. SMB Accounting can easily ensure this when completing your return by using data available from the ATO
How to find out your interest amounts…
Usually you will receive a statement from your bank or institution which details the amount of interest earned on each account held with that bank. If not, you can always check your internet banking or go to the branch itself
If you have a joint account with a family member or an associate/friend remember to only include your share of the interest earned which is usually 50%. Eg if your joint account with your spouse earned $300 interest, then each of you would include $150 (50% of $300) in your tax returns.
Do not deduct account keeping fees from the interest amount
Trusts, Partnerships or other sources of Interest Income….
If you have earned interest from any of these sources, they are returned in a different section of your tax return which SMB Accounting can complete this when compiling your return.
Failure to provide a tax file number…
When opening a bank account you would have had the option to provide a tax file number (TFN) . If you didn’t provide your TFN, the bank is obligated by the law to withhold tax from your interest payments. If this has happened, you will be provided with the amount of tax withheld on your interest statement and this amount is to be included in your Tax Return as it will be offset against other tax payable or be refunded.
This can become quite complicated, so if you are unsure whether you need to include your interest or any other questions on your tax return? Contact us on mailto:firstname.lastname@example.org and we can provide you with guidance and advice based on your own particular circumstances.