Tax Incentives

In May 2010 the Federal Budget announced that from July 1, 2011 new tax incentives will come into effect for savers.

The new tax incentives state that savers will receive a 50 percent discount on the first $1000 worth of interest earned from savings accounts, debentures, annuities and bonds. For example if you deposited $20,000 into an online savings account for 12 months at a rate of 6.5 percent and deposit $100 extra per month, you will earn over $1,375 in interest. The new tax incentive means that $500 of your interest is tax free, so you pay interest on $875.

The current tax system depends on how much you earn. For example if you earn the current average of $60,000 per year, you pay 30 percent tax on interest earned.

If you are in the market for a savings account, the table below shows high interest savings accounts earning over 7 percent interest.