Savers set to benefit from tax breaks

The federal government is planning to bring in tax breaks for Australian bank accounts and deposits as part of a new savings scheme.

Under the scheme, savers will be offered tax breaks similar to the superannuation discount rate of 15 per cent, the Daily Telegraph reported.

However, Australians may have to "lock up" their savings for a number of years in order to qualify for the special rate.

The newspaper noted that Australia is one of the few countries in the world which currently taxes bank savings at the full rate, with some savers paying up to 50 per cent on interest earned from their bank deposits.

It is thought the new tax breaks will be announced as part of the government’s response to the Henry tax review.

Such reforms may encourage bank customers to compare term deposits in search of the best returns. Steven Munchenberg, chief executive of the Australian Bankers’ Association, recently pointed out that interest rates of over seven per cent are being offered on some term deposits.

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