In media release No 2011/157, issued 23 November 2011, the Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, announced that the Government will defer by one year its phase down of interest withholding tax, paid primarily by financial institutions.
The Government announced in the 2010-11 Budget that it would phase down the rate of interest withholding tax (IWT) for financial institutions from 2013-14.
This one-year deferral will mean that:
- The rate of IWT for foreign bank branches which borrow from their overseas head office will fall from 5% to 2.5% in 2014-15, and to zero in 2015-16
- The rate of IWT for other financial institutions which borrow from foreign financial institutions, and financial institutions which borrow from offshore retail deposits, will fall from 10% to 7.5% in 2014-15, and to 5% 2015-16.
The one year deferral will save $70 million in 2013-14 and $70 million in 2014-15.
The measure in the 2010-11 Budget to phase down the rate of IWT was one of several measures to be funded from revenues flowing from the Minerals Resource Rent Tax.