Tax breaks 'could encourage more Aussie savers'

Proposed federal government tax breaks could prove to be powerful incentives to Aussie savers, it has been claimed.

Paul Clitheroe, founding director of financial planning firm ipac, noted that if the government sticks to its Budget tax pledges, savers will see the first $1,000 of interest earned on deposit accounts attracting a 50 per cent tax discount from July 1st, 2011.

Writing for the Sunshine Coast Daily, he suggested the move could encourage more Aussies to compare term deposits and other investment options.

"This is a plus for savers, because without the tax break, a high income earner for example, could lose up to almost half any interest income to the tax man," commented Mr Clitheroe. "Put differently, the tax concession on interest is like earning a higher return on your savings."

The expert observed that both shares and property also offer tax concessions on capital gains as he urged savers to have both income producing and growth investments in their portfolios in order to reap the best long-term returns.

Earlier this week, finance expert Bina Brown wrote in the Sun-Herald that prospective first home buyers must have a strong savings history if they are to be successful in the property market.

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