In media release No 2011/110, issued 12 July 2011, the Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, announced the release of a discussion paper outlining the Government’s proposed approach to introducing a 50% tax discount for interest income, as announced in the 2010-11 Budget.
In 2012-13, individuals will be entitled to a tax discount equal to 50% on up to $500 of net interest income received. From 1 July 2013, individuals will be entitled to a tax discount equal to 50% on up to $1,000 of interest income received each year.
The measure applies to "net interest". This will involve reducing the amount of eligible interest income received by the amount of expenses incurred related to that income, before applying the 50% discount.
Interest will retain its character when passed via a trust or partnership to an individual.
The discount will apply to interest received from deposits held with any bank, building society or credit union, as well as interest on bonds, debentures and annuity products.
The closing date for submissions is 5 August 2011.