BSB 806 015

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BSB 806 015

Shelve Work on Deposit Tax Until After Review

09 Jun2015

The Customer Owned Banking Association (COBA) has called for the Government’s tax review to be completed before any changes to deposit taxes are considered.

"New taxes shouldn’t be implemented until a comprehensive review of Australia’s tax system has delivered its verdict," COBA CEO Mark Degotardi said.

"Any changes to our tax system need to be considered in a holistic fashion."

"Our submission to the tax review focuses on ways we can improve the tax treatment of deposits, not add to the tax burden of Australian savers."

"Current arrangements are punitive for savers who are already facing record low interest rates and a new tax will only make things worse."

COBA makes three key recommendations in its submission to the 'Re:think' tax discussion paper:

  • Improve the tax treatment of deposits relative to other savings options;
  • Not increase the tax rate applied to deposits through the introduction of a new deposit levy; and
  • Accommodate the customer-owned banking model by reforming franking credit arrangements to ensure that customer owned institutions are not unfairly disadvantaged relative to listed banks.

“There is no strong policy case for a deposit tax but it will hit consumers and will have a detrimental effect on competitive neutrality in the banking sector," Mr Degotardi said.

“This tax has a bigger impact on smaller institutions, given their higher reliance on retail deposits compared to the big four banks.”

For further information, Customer Owned Banking Association is the industry body for credit unions, building societies, mutual banks and friendly societies. See www.customerownedbanking.asn.au

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