Interest on Overpayments to ATO - Is It Taxable?

jjj123 on 14/02/2025 - 11:30
Last edited 14/02/2025 - 16:31 by 1 other user

ATO states they will pay 4.42% interest on early payment to income tax, does this make the interest taxable like the bank interest?

If yes, will the interest automatic load up under MyGov/Mytax lodgement like banks?

1 January 2025 to 31 March 2025 4.42%

Highest interest rate to pack $50K is ING or Ubank 5.5%, but after tax rate 32.5% and Medicare levy 2%, is just 3.6%

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nissa on 14/02/2025 - 11:41

+4

Yes and Yes.
Duckie2hh on 14/02/2025 - 11:41

-1

does this interest taxable like the bank interest?

Yes, why wouldn't it be?

If yes, will the interest automatic load up under mygov/mytax lodgement like banks?

You will need to check.
bemybubble on 14/02/2025 - 11:45

+1

If yes, will the interest automatic load up under mygov/mytax lodgement like banks?

Will be on your prefill - yes
Seraphin7 on 14/02/2025 - 11:46

Tax treatment of IEP
Interest on early payments is assessable income. Include any IEP in your tax return in either the:

income year you receive the interest payment
income year it is offset against another tax debt you had with us.

Source: Bottom of your second link.
CaptainJack on 14/02/2025 - 14:07

Yes - the ATO is not going to let you have a cent without getting their cut. But don't worry, they'll do you the 'favour' of pre-filling it.