It’s so easy to do… you roll some of your hard earned investment dollars into a term deposit… then another… without providing your Tax File Number (TFN). You aren’t forced to provide it, after all. Perhaps you didn’t have it handy, then forgot to go back and provide it.
Sound familiar? This happens to many people not knowing the consequences.
The problem is, the bank then has no alternative but to withhold tax and send it to the Australian Taxation Office. Worse, withholding tax is calculated using the top marginal rate of tax – 45% – plus the Medicare levy – another 1.5% – that is 46.5% in total.
So basically half your interest …as if interest rates weren’t low enough already.
We strongly recommend, therefore, that you make sure your banks have your TFN on record. Give them a quick call, just to make sure.
But what if tax has already been withheld from your interest? We have good news.
There is easy way to claim the tax back… but there is some paperwork.
Claiming it back
1. If you receive one of the following benefits, you can download a simple form from the ATO to claim back all your tax withheld – even for prior years.
- age pension
- disability support pension
- wife pension
- parenting payment(single)
- widow B pension
- special needs pension
- carer payment
- special benefit
- veterans’ affairs pension with a pensioner concession card.
2. If you don’t receive one of the above, you can still claim the tax back, but you will need to do so through your next tax return.