Last updated: 11 October 2026 · Rates checked against: ATO — Investing in bank accounts and income bonds
Reviewed by Zia Shahid, Buzdy Banking Editor · Our methodology
In this guide
Australian banks normally deduct nothing from your interest. You declare it and pay at your own marginal rate. But if the bank does not have your tax file number, it is required to take almost half.
Normally: interest is declared on your return and taxed at your marginal rate.
If the bank has no TFN for you: it withholds at 47% — the top marginal rate plus the Medicare levy.
Foreign resident who has given an overseas address: 10%. Without that address: 47%.
Amounts withheld for a missing TFN can be claimed back when you lodge your return.
The TFN rule
Quoting your TFN to a financial institution is optional — but if you do not, PAYG tax is withheld from your interest at 47%. It appears on statements as "Commonwealth tax" or "TFN withholding tax".
It is recoverable: the amount withheld is credited when you lodge. The cost is that your money sits with the ATO for up to a year instead of with you.
Children's accounts
The ATO applies the same 47% where a child's account has neither a date of birth nor a TFN recorded. A return then has to be lodged to get it back. There is an exemption for accounts in a child's name earning below a small annual threshold.
If you have left Australia
For a foreign resident, giving the bank your overseas address matters: with it, interest withholding is 10%; without it, the bank applies 47%. This is the single most common reason expatriates find their Australian savings cut almost in half.
Frequently asked questions
Can I get the 47% back?
Yes. It is a credit on your tax return, not a final tax.
Do I have to give the bank my TFN?
No, it is not compulsory. But the withholding applies if you do not.
I live overseas now. What should I do?
Make sure your Australian bank holds your overseas address. The withholding rate for a foreign resident with an address on file is 10%.
Is interest from a foreign bank taxable in Australia?
An Australian resident is taxed on interest from both Australian and foreign sources.
Sources
This is information, not tax advice. The figures above were checked against the source named at the top of this page on 11 October 2026. Tax rules change, usually with each annual budget. For a decision about your own money, speak to a qualified tax adviser in your country.
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