For bank interest income of non tax resident (with TFN), will interest be credited with 10% withholding tax deducted by Bank or full interest credited with 10% tax payable after filing annual ATO's tax return?
For bank interest income of non tax resident (with TFN), will interest be credited with 10% withholding tax deducted by Bank or full interest credited with 10% tax payable after filing annual ATO's tax return?
If interest withholding tax has been correctly withheld then the net amount is exempt income. There is no requirement to file a tax return for this interest income. If the non-resident has to file a non-resident Australian tax return for other Australian source income, there is no credit for the 10% interest withholding tax paid and no deductions for expenses in earning that interest income.
There are some narrow exemptions from the interest withholding requirement but that does not extend to plain old loans. They typically apply to public offer debentures, non-equity shares and syndicated debt.
So the answer depends upon what type of bank product. This may require further digging with the help of a tax agent rather than accepting a bank employee's verbal opinion.
Only interest income on savings account and there is no other Australian source income. So, will filing annual tax return and paying 10% tax be easier than declaring to the Bank as non-resident?
