# Question about savings account "withholding tax"



## damien275x (7 April 2010)

Hello all

I have a ING high interest account, and since my new job I have a lot more money saved in there.

Every month I get interest, and then every time the interest comes in, they take away 'Witholding tax' .. I have figured out this is because they don't know my Tax File Number, if I call them and provide them with they adjust it?

Or refund if they have taken away too much? Worried I may be losing money
Thanks


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## YELNATS (7 April 2010)

*Re: Question*

You could try, but I doubt they will refund the interest already taken as withholding tax. However, after you supply your TFN they should not take any more tax.

If they have taken too much tax, you should get a full or partial refund from the government, depending on how much is your other income and tax paid, when you next submit your tax return to the ATO.


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## drsmith (7 April 2010)

*Re: Question*

The ATO gets you either way with quarterly instalment activity statements (today's provisional tax). Supplying a tax file number to the bank and paying the tax directly to the ATO through quarterly instalments in arrears is slightly better as you have the money earning interest a bit longer and possibly a lower tax rate (depending on your marginal tax rate).


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## bellenuit (7 April 2010)

damien275x said:


> Hello all
> 
> I have a ING high interest account, and since my new job I have a lot more money saved in there.
> 
> ...




When you provide the number, there will be no withholding from future interest payments, but ING will not refund what has been withheld to date.

If you look at the Tax Return for Individuals 2009 form, you will see under question 11 Box M you can enter the value for "Tax file number amounts withheld from gross interest". It will also be in the equivalent e-tax section. It is up to you to claim it back by entering the appropriate amount withheld here. 

It makes sense to give your tax file number as you will get to keep your money for a while longer before the ATO grabs it.


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## damien275x (8 April 2010)

Thankyou for this information. I have declared my TFN to ING and now will no longer be charged Withholding tax. Also..	it says savings are guaranteed until 2011 up to $1 million dollars

What will happen at 2011, will the guarantee be renewed? If it's not guaranteed I wouldn't want money in there..


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## newbie trader (8 April 2010)

damien275x said:


> Thankyou for this information. I have declared my TFN to ING and now will no longer be charged Withholding tax. Also..	it says savings are guaranteed until 2011 up to $1 million dollars
> 
> What will happen at 2011, will the guarantee be renewed? If it's not guaranteed I wouldn't want money in there..




Didn't you have to supply them with your TFN when opening the account? I know for my IGN savings account I did.


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## YELNATS (8 April 2010)

*Re: Question*



drsmith said:


> The ATO gets you either way with quarterly instalment activity statements (today's provisional tax). Supplying a tax file number to the bank and paying the tax directly to the ATO through quarterly instalments in arrears is slightly better as you have the money earning interest a bit longer and possibly a lower tax rate (depending on your marginal tax rate).




I am assuming from his first post that damien is a paye (pay-as-you-earn) employee so he would settle with the ATO once a year asap after June 30th each year through his personal tax return and not via quarterly instalment activity statements which are for businesses.

Also, by not advising his TFN number to his bank they would be taking out withholding tax at the highest marginal rate plus the medicare levy which may be inappropriate/excessive in his case.


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## bellenuit (8 April 2010)

damien275x said:


> Thankyou for this information. I have declared my TFN to ING and now will no longer be charged Withholding tax. Also..	it says savings are guaranteed until 2011 up to $1 million dollars
> 
> What will happen at 2011, will the guarantee be renewed? If it's not guaranteed I wouldn't want money in there..




I believe the guarantee is by the Federal Government and was introduced to give stability to the banking system when the GFC looked like bringing the world financial system down a couple of years ago. So pre 2008 (or whenever it was introduced), there was no guarantee anyway. When it is removed, it will be removed from all banks, so ING will be no different.

Without the guarantee, the banks will probably be as safe as anywhere else to store your money, apart from government bonds, and a lot safer than keeping it under the bed. Alternatives like shares and property will be riskier, but offer better returns. Like everything else, it is risk vs reward.


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## Julia (8 April 2010)

Yes, agree with Bellenuit.  Our banks are rigidly regulated by APRA.
The government guarantee was not necessary from the point of view of the banks' stability.  It was a social measure by the Rudd government to stem the sense of panic at the time.

The banks seem to have learned something about lending criteria from it all.
On tonight's "PM" there was an item outlining the banks' future intention to require a deposit for home lending of at least 20%.  About time.


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## gooner (8 April 2010)

Julia said:


> Yes, agree with Bellenuit.  Our banks are rigidly regulated by APRA.
> The government guarantee was not necessary from the point of view of the banks' stability.  It was a social measure by the Rudd government to stem the sense of panic at the time.
> 
> The banks seem to have learned something about lending criteria from it all.
> On tonight's "PM" there was an item outlining the banks' future intention to require a deposit for home lending of at least 20%.  About time.




Suncorp and MQG were struggling to roll over their wholesale debt at the time. General view in the banking industry is that they would likely had to go into administration had the Government not bought in the guarantee.

On the withholding tax, I got hit my first interest payment on my SMSF. Gave them the tax file number and they gave me the withholding tax back.  Otherwise, just get it back in  your tax return


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## drsmith (10 April 2010)

*Re: Question*



YELNATS said:


> I am assuming from his first post that damien is a paye (pay-as-you-earn) employee so he would settle with the ATO once a year asap after June 30th each year through his personal tax return and not via quarterly instalment activity statements which are for businesses.



No. Wage earners cop it too if they get enough business and/or investment income on top of their salary. The thresholds are not particularly high either.

http://www.ato.gov.au/businesses/content.asp?doc=/content/13096.htm&page=2&H2



YELNATS said:


> Also, by not advising his TFN number to his bank they would be taking out withholding tax at the highest marginal rate plus the medicare levy which may be inappropriate/excessive in his case.



Agreed.


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## Rustyhull (3 May 2010)

What I can't understand about Withholding tax, if the banks withhold the tax do the bank hold it in a separate account and gain the interest on it by investing it in the money markets and pocket the interest instead of passing it on to the customer. Or do they actually pay it to the ATO, if so how do they pass it off as the customers tax they are paying without a TFN ?.


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## son of baglimit (3 May 2010)

due to a banks size, it will report & forward any withholding tax twice a week, then once a year supply a report detailing exactly who the withholding taxes belong too. 

pretty much the same process any employer has with reporting withholding from employees, except they might report quarterly, monthly, or twice a week (depending on size) and again provide the specific details annually.

the ato get the actual funds well before knowing who it actually belongs to.


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