The Australian Financial Review --- Page: 70 : 15 October 2007 Original article by John Stewart
LexisNexis Summary
Australia would benefit from more equitable tax treatment of bank deposits. Australian banks gain a large part of their funding from bank deposits. This buffers them from changes in capital markets. However, the interest on bank deposits is charged at the marginal rate of income. This makes it less attractive than superannuation contributions or property investment. Consequently, deposit levels have fallen and the amount of bank lending sourced from bank deposits has dropped. Banks then have to get funds from capital markets at higher costs.
