Check your term deposit at tax time
Here’s what to do about the interest you’ve earned and your obligations to the ATO.
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National Seniors Term Deposit
With no fees and flexible terms, the National Seniors Term Deposit allows you to lock in a competitive interest rate that’s protected for your fixed term.
You can earn competitive interest rates up to 4.20% per annum.
National Seniors members can earn a special rate of 4.10% for 5 months or 4.20% for 6 months on maturity for term deposits over $5,000.
At this time of year, seniors with term deposits should take a moment to review how these savings products can impact their tax returns.
While term deposits offer a low-risk way to build a nest egg, the interest they generate must be reported as income to the Australian Taxation Office (ATO) – and timing matters.
A term deposit is a fixed investment where your money is locked away for a set period – typically from a few months to several years – at a guaranteed interest rate.
They are popular with retirees for their stability and predictable returns. However, even though you may not withdraw the money during the term, the interest earned still has tax implications.
You must report interest income in the financial year in which it is credited, not necessarily when the term ends or when you withdraw it.
For example, if you hold a 12-month term deposit from October 2023 to October 2024, and interest is credited at the end of the term, that interest will count as income for the 2024–25 financial year, not for 2023–24.
However, if the interest is paid or credited periodically (e.g. monthly, quarterly, or annually), you need to report whatever portion is credited during the relevant tax year.
Many banks report interest directly to the ATO, and this information may appear in your pre-filled tax return in MyGov. However, it’s still your responsibility to ensure the details are correct.
Always check your bank statements or contact your bank to confirm how much interest was credited in the financial year.
Some older Australians may be eligible for the Seniors and Pensioners Tax Offset (SAPTO), which can reduce the amount of tax owed on interest income. If your total taxable income is within the eligible threshold, you may pay little or no tax at all.
A registered tax agent or financial adviser can help assess your eligibility.
In summary, here’s a tax-time checklist for those with term deposits:
Check when interest was credited to determine the correct year to declare it.
Confirm interest amounts with bank statements or online banking.
Ensure pre-filled data matches their records.
Explore tax offsets that may reduce their liability.
Being accurate with term deposit interest helps avoid errors and ensures you meet your tax obligations with confidence.
National Seniors Australia Ltd ABN 89 050 523 003 arranges deposits as an authorised representative (AR 282736) of Auswide Bank Ltd (Auswide Bank) ABN 40 087 652 060, AFSL and Australian Credit Licence 239686. Auswide Bank is a wholly owned subsidiary of MyState Bank Limited ABN 89 067 729 195, part of MyState Limited ABN 26 133 623 962. We do not provide any advice based on any consideration of your objectives, financial situation or needs. A target market determination can be obtained at auswidebank.com.au/tmd. Before making a decision to invest, please consider the Terms and Conditions. If you make a deposit, we will receive a commission from Auswide Bank. For more information about our relationship with Auswide Bank please read the Financial Service Guide contained in the Terms and Conditions*. This account is protected by the Australian Government deposit guarantee. Up to $250,000 of deposits in ‘protected accounts’ held by an entity with Auswide Bank are covered under the Financial Claims Scheme. Information on the Financial Claims Scheme is available at www.fcs.gov.au
