By Stephen Burns, CEO Mr Tax Refund.
Are you paying a mortgage?
If you have money accumulated whether it is by saving or from selling personal assets, you could lose interest if you put the money into a standard bank account.
This is because all interest needs to be declared at the end of the financial year and it’s added to your taxable income (potentially bringing you into a higher tax bracket).
So depending whether or not you’re in a medium to high tax bracket you could be losing 37-47% of the interest accumulated to the tax office.
If you’re paying off a mortgage, putting this extra cash into an offset account can reduce the amount of interest payable on the mortgage. It would also stop you paying tax on the interest you would have earned from the money sitting in a standard bank account.
You could easily set up an offset account and organise a debit card to be directly linked with the help from your bank. Usually there is a minimum amount that needs to be kept in the account, but the main idea is that you have your salary paid into there as well. You then use this as an everyday account, paying for personal expenses, bills, insurances and other utilities.
This tip will see you savings hundreds on your individual tax return over-time and it has many personal financial gains as well, cutting the length of your mortgage and the cost of the interest long-term.
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