Interest you earn on term deposits and savings accounts is taxable income in Australia.
The basics
- Interest is added to your assessable income and taxed at your marginal tax rate.
- Banks report the interest to the ATO, and it usually pre-fills in your tax return.
- Tax applies for the year the interest is credited to you, not when the deposit matures.
A long-term-deposit gotcha
On multi-year term deposits, interest is generally taxed in the year it's credited. If your deposit pays interest annually, you may owe tax on it each year — even before you can access the money at maturity.
Tax File Number
Give the bank your Tax File Number (TFN) when you open the account. Without it, the bank must withhold tax at the top rate, which you'd later claim back.
This is general information, not tax advice. For your situation, check the ATO or a registered tax agent.