Is it that time already? Well, yes it is. 

The annual obligation to put in a tax return can sometimes feel overwhelming, but paying close attention to details, especially concerning any funds held in term deposits, can help ensure a smooth and accurate process. 

Finalising your tax return by the deadline is crucial to avoid penalties and ensure you meet your legal obligations. 

The Australian Taxation Office (ATO) requires all taxpayers to lodge their returns by 31 October, unless you are using a registered tax agent, in which case the deadline may be extended. 

Failing to submit your tax return on time can lead to fines and interest charges, adding unnecessary financial strain. 

Moreover, accurately reporting your income, deductions, and any interest earned on investments, including term deposits, ensures you pay the correct amount of tax and, if applicable, receive any refunds due to you.

Term deposits are a popular investment choice for Australians seeking a low-risk option to grow their savings. These are fixed-term investments where your money is locked away for a specified period, earning a fixed rate of interest. 

While term deposits offer stability, it’s essential to remember that the interest earned is considered income and must be declared on your tax return. 

• The interest you earn from a term deposit is considered income and must be included in your tax return. This applies regardless of whether the interest is paid monthly, annually, or at the end of the term. 

• The ATO receives information about your interest earnings directly from banks, but it’s your responsibility to ensure this information is correct on your tax return. Double-check the interest reported by your financial institution and include it in your income. 

• If your term deposit matured during the 2023-24 financial year, you must report the interest earned during that period, even if you have reinvested the funds. This can sometimes be overlooked, so it’s important to review your statements carefully. 

• Interest is taxable in the year it is earned, not necessarily when it is received. For example, if your term deposit earns interest annually but you don’t receive it until the deposit matures, you still need to declare the interest earned during each financial year. 

• Ensure you have all necessary documents, including bank statements, interest summaries, and any other relevant financial records. This will help you accurately report your income and avoid any discrepancies.

• If you have multiple investments or find the tax return process daunting, consider using a registered tax agent. They can help ensure all your income, including interest from term deposits, is accurately reported and may help you maximise your deductions.

• The ATO often pre-fills certain information in your tax return, including interest from term deposits. While this can save time, it’s crucial to review the information for accuracy and completeness.

• As you finalise your tax return, consider any deductions you may be eligible for, such as work-related expenses or donations to charity. Properly claiming deductions can reduce your taxable income and the amount of tax you owe.

• Ensure you lodge your tax return by the deadline to avoid penalties. If you need more time, contact the ATO or your tax agent to discuss your options.

This article and any links provided are for general information only and should not be taken as constituting professional advice. National Seniors is not a financial advisor. You should consider seeking independent legal, financial, taxation or other advice to check how any information provided relates to your unique circumstances.