Tax-Free Savings Account Australia

Find and compare the best savings accounts for you with Savvy while also working out how much tax you’ll have to pay.

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, updated on July 28th, 2023       

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Compare savings accounts

Are you looking to grow your savings?  Compare a wide range of savings accounts with Savvy so you find the best deal in Australia and the highest interest rate to help grow your savings.  

site-logos Rabobank High Interest Savings Account
  Maximum interest rate Base interest rate Introductory offer period Government guarantee  
site-logos 5.75% p.a. 4.40% p.a. 4 months Yes
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Rabobank’s High Interest Savings Account helps grow your savings while offering flexibility and easy access to your money.

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site-logos Up Savers Account
  Maximum interest rate Base interest rate Introductory offer period Government guarantee  
site-logos 3.60% 0.00% N/A Yes
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Use invite code SAVVY10 for $10 upon successful sign-up. (Refer to offer T&Cs on Up website)

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Disclaimer: Savvy is not advising or recommending any particular product to you. We provide general information on products for the purposes of comparison, but your personal situation or goals are not considered here. Although we try to make our comparisons as thorough as possible, we do not have information on all products on the market on our site.

You should always consult a given offer's PDS or further documentation in the process of deciding on which loan to choose, as well as seeking independent, professional advice. If you decide to apply with one of the lenders listed above via our website, you will not be dealing with Savvy; any applications or enquiries will be conducted directly with the lender offering that product.

Compare tax-free savings accounts

As the old saying goes, the only unavoidable things in life are death and taxes. The latter will apply when you open a savings account, with the interest you earn counting as taxable income unless you’re in the tax-free threshold.

That’s why comparing with Savvy is important. You can find an account with a competitive rate and low fees so you have more cash left over after tax time. Read Savvy’s comprehensive guide to savings accounts and how to estimate the amount of tax you’ll have to pay.

Do tax-free savings accounts exist in Australia?

No – tax-free savings accounts don’t exist in this country. Under Australian tax law, you must declare any earnings on bank accounts when filing your tax return. How much you pay on this money will depend on your gross income, not solely the money you earn in your savings account.

Your best shot at paying less tax is finding an account with a high interest rate and low fees. This will leave more money in your pocket once you’ve removed the tax you need to pay. Savvy helps with this by allowing you to compare and find the best account for you to help boost the interest you earn.

Why do I need to declare my interest when submitting a tax return?

Accruing interest on the money you have in a savings account, in turn, earns you money. As such, it’s seen as an income stream in the eyes of the Australian Taxation Office (ATO). Even if you fall into a low-income bracket, you must still declare your interest in your tax return. Because of this, when you’re filing a tax return at the end of the financial year, you need to declare your interest alongside any other earnings for that period, such as your salary.

You’ll have to declare interest on money which otherwise wouldn’t be subject to tax, including lottery winnings or money gifted to you. If you opened an account without a tax file number (TFN), your financial institution will automatically deduct tax from your interest payments.

Finding out how much interest you’ve earned over 12 months is relatively straightforward, as your institution will send you regular bank statements showing the amount of interest you’ve earned. You should also be able to find this on your internet banking app.

Financial institutions report interest earnings to the tax office, who matches this with the information provided in tax returns. Penalties or refunds can apply if there are discrepancies.

How do I work out if I have to pay tax on my interest?

The amount of tax a person pays is determined by their gross income. This income is subject to a tax rate which varies depending on how much you earn each year. The tax brackets are as follows:

  • $0 to $18,200: Tax-free
  • $18,201 to $45,000: 19 cents for each $1 over $18,200
  • $45,001 to $120,000: $5,092 plus 32.5 cents for each $1 over $45,001.
  • $120,001 to $180,000: $29,467 plus 37 cents for each $1 over $120,000.
  • $180,000 and over: $51,667 plus 45 cents for each $1 over $180,000

How should I compare savings accounts?

Comparing savings account deals with Savvy is your best shot at finding a great offer which suits your needs. Getting the best deal can avoid your hard-earned interest being eaten up at tax time, leaving more money in your account. Variables to watch out for include:

Look at the interest rate

Your bank balance will grow faster if you have a high interest rate. Take this simple calculation: if you deposited $100 a week in an account with an interest rate of 2% p.a. for five years, you’d earn $600 more in interest than if you invested in an account bearing 1% p.a. By comparing options with Savvy, you can find a savings account with the most competitive interest rate on the market. Savvy’s easy-to-use savings calculator can help you estimate your savings growth.

Account accessibility

Everyone uses their money differently, so it’s important to weigh up what access you need from an account before opening one. Otherwise, you could be caught short if you can’t easily access funds. For instance, term deposits will lock your money away, while online savings accounts will give you easier access. Also, make sure you can easily make deposits through internet banking or a mobile app. You can even use Savvy’s handy online calculator to work out how much to deposit to achieve your savings goal.

Assess account requirements

No two savings accounts are the same. Some will come with opening balance or minimum deposit requirements in exchange for you earning a higher rate. Making more than a set number of withdrawals (such as two to five) in a month could also jeopardise your high rate. You can make use of Savvy’s side-by-side comparison table to weigh up which account has conditions you can afford. This will prevent you from picking a set of benchmarks you’ll struggle to meet.

Weigh up interest with any fees

Banks can charge you for using one of their accounts to store your money. Monthly fees for account keeping (up to $5), statements or transactions (up to $2.50) can add up over years, so it’s important to compare with us to find the most affordable option for you.

Consider introductory rates

Institutions offer introductory rates as sweeteners to get customers to open accounts with them. These rates provide a short period of high interest, usually about three to six months, before reverting to a much lower base rate. A low base rate could cost you in the long run, so it’s important to assess whether an introductory rate is suitable for your goal.

Check linked account requirements

Linked everyday accounts can provide you with a quick and easy place to transfer your savings when you see fit. However, some financial institutions have strict rules around opening one with an opposing bank. This is worth comparing, particularly if you want to keep using an external account.

Types of savings account

Why compare savings accounts with Savvy?

Frequently asked savings account questions

How is tax on joint account interest assessed?

The tax office presumes that account holders have a 50/50 share in the account unless evidence to the contrary is provided. For example, if one person contributed more, they can opt to pay a larger share of tax.

Are children’s savings accounts tax-free?

No – parents must declare any interest earned in a child’s savings account on their behalf. However, unless a child earns more than $416 interest on their account, this will be tax-free.

What are the eligibility requirements for opening a savings account?

To open your savings account, you must be at least 14 years old and have an Australian residential address for tax purposes. Age requirements tend to vary between 12 and 14, depending on the bank you want to deal with.

Do I need to open a savings account at a branch?

No – but this depends on your circumstances. You’ll only need to visit a branch to open an account if you have more than two account holders or are under 14 years old. If you’re under 14, you’ll need to be accompanied by a parent or guardian.

What documents will I need to provide?

You’ll need to provide 100 points of identification to open a savings account. A birth certificate or a passport is worth 70 points, with driver’s licences, employee IDs and Proof of Age card worth 30 points. It’s worth checking with your bank to see which forms of ID they accept from their customers.

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