Paying tax on term deposits

By December 10, 2019 Tax

The interest you earn from term deposits is subject to tax, just like your regular income. You have to declare investment income on your tax return, including interest in the year it was credited or received.

The amount of tax you need to pay depends on the amount of interest you earn on your term deposit as it is part of your overall taxable income and will therefore be taxed at the same marginal tax rate that applies to the rest of your income. The ATO’s marginal tax rates for the current financial year are:

  • $0 for an income of $18,200
  • 19c for each $1 over $18,200 for an income of $18,201 – $37,000
  • $3,572 plus 32.5c for each $1 over $37,000 for an income of $37,001 – $90,000
  • $20,797 plus 37c for each $1 over $90,000 for an income of $90,001 – $180,000
  • $54,097 plus 45c for each $1 over $180,000 for an income of $180,001 and over

If you decide to roll over your interest earnings into a new term deposit, you will still need to declare the interest on your tax return if you choose to reinvest the money instead of accessing it.

Term deposits run under a joint account will have the ATO assuming each person has equal ownership to the funds in the account. This means that the interest earned is equally split between you and your account partner(s), where you will have to pay tax on your portion. If the funds in your account are not split equally, you can provide the ATO with documentation proving the amount you each earn and be taxed different amounts accordingly.

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2019 Updates to the Pension Loan Scheme

By December 7, 2019 Super

Changes have been made to the Pension Loan Scheme (PLS) under the federal government that came into effect 1 July 2019. The updates aimed to improve the previous scheme and help more retirees boost their retirement income and pay for extra expenses such as home care.

The key features of the new Pension Loan Scheme are:

  • Extended eligibility to all Australians of age pension age, now including those currently received the maximum rate age pension.
  • The maximum PLS income stream will be the difference between your current age pension payment and 150% of the age pension rate.
  • A single person will be able to borrow up to $36,000 a year and a couple could potentially borrow up to $54,000 per year, paid in monthly instalments.
  • PSL loans are not taxable and are not counted in the age pension income test.
  • The interest rate is 5.25% pa compound, which has been the same since 1997.
  • There are no establishment fees or monthly account fees.

To be eligible for the PLS, the following criteria must be met:

  • You or your partner have reached age pension age.
  • You own real estate with enough equity to secure a loan.
  • You have adequate insurance covering the property.
  • You are not bankrupt or subject to a personal insolvency agreement.
  • You qualify for one of the following pensions: age pension, bereavement allowance, carer payment, disability support pension, widow pension, or wife pension.

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Pros and cons of hiring an intern

By December 6, 2019 Business

With so many eager school-leavers looking for employment opportunities, hiring an intern can seem like a good way to offer work experience to someone without the risks of a long-term commitment of a regular employee. However, you should consider whether hiring an intern would be the best move for your business. Here are some pros and cons you may run into:


Extra help: It can be handy to have some extra assistance over busy periods in your business. This also ensures that the intern isn’t bored and gets hands-on experience taking on real-world tasks.

Potential employment: If you feel that the intern fits into the workplace well, you could offer them employment later on. This is often a smoother introduction to employment as they are already trained and familiar with the business. However, you are not obligated to offer them a job if you don’t feel they are a good fit.

Fresh perspectives: Interns can often offer new perspectives to work that you may not have thought about before. Having someone who hasn’t sunk into the routine of your workplace yet can be useful in offering new ways of thinking that could potentially improve your business.

Social media insight: Most interns are young and tech-savvy and could offer important insights into the world of social media for the new generation. They could help you devise relatable, trendy content for your social media that you may not have considered.


Time commitment: Taking on an intern means that you will need to filter through applications and conduct interviews, as well as providing them with supervision and training. If you’re too busy to dedicate time to take care of an intern, it may not be the best move for your business.

Inexperienced: If you’re looking for some to take on roles that require knowledge and experience, an intern may not be the right choice as they often have limited work experience in career-based roles.

Less flexible: If an intern is still studying, then the hours they can offer you can be limited and variable depending on their timetable. As well as this, when exam periods arrive they could have an exam on a day they would normally work or may ask for time off to study.

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Making NRAS claims

By December 3, 2019 Tax

The national rental affordability scheme (NRAS) started on 1 July 2008, encouraging large-scale investment in affordable housing. It offers tax and cash incentives to providers of new dwellings for 10 years, granted they are rented to low and moderate income households at 20% below market rates.

Though the NRAS is no longer taking new investments, property owners within the scheme will soon be receiving letters from the ATO to remind them of their claim requirements.

The two key elements of the NRAS are;

  • An Australian Government contribution in the form of a refundable tax offset or direct payment to the value of $8,394.10 per dwelling per year in 2018-19. The Australian Government contribution is 75% of the total annual incentive.
  • A state or territory contribution in the form of direct financial support or an in-kind contribution to the value of at least $2,798.03 per dwelling per year in 2018-19. The state or territory contribution is 25% of the total annual incentive.

Owners of NRAS rental property are eligible to claim a refundable tax offset if:

  • The Approved Participant has provided them with advice of their entitlement based on the certificate received from the Housing Secretary, and;
  • The claim is made in the year to which the certificate relates.

Deductions can be claimed for expenses incurred with a NRAS rental property, excluding the contribution amount received from the state or territory. The contribution amount is non-assessable, non-exempt (NANE) income for tax purposes.

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