Swan backtracks again on tax discount for savings products

In the May 2010 Federal Budget, the Government announced a tax discount on interest income derived from savings products, to take effect from 1 July 2011.

The tax discount policy was intended to allow Australians to claim a 50% tax discount for the first $1,000 of interest they earn, including interest earned on deposits held in banks, building societies and credit unions, and on bonds, debentures and annuity products.

The Federal Government claimed this new incentive would benefit around 5.7 million Australian depositors in the 2011/2012 year, and would cost just under $1 billion over 4 years.

Well, it never started from the 2011/2012 year because the ALP Federal Government decided to defer the tax discount policy until July 2012 (2012/2013 year) due to other funding priorities demanded by the independent MPs holding the balance of power in the House of Representatives.

In the May 2012 Federal Budget, Treasurer Swan has finally come clean with yet another policy deception and admitted that the 50% tax discount on the first $1,000 of interest earned on savings accounts was never going to happen.

With so many policies promised so far in advance, and with so many policies reversed or minimised, I wonder whether you can really trust anything published in a Wayne Swan budget unless it commences from 1 July 2012.

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