Bank levy and offset accounts

Discussion in 'Loans & Mortgage Brokers' started by bunkai, 10th May, 2017.

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  1. bunkai

    bunkai Well-Known Member

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    The banks are going to implement this in their own way but any opinions on whether offset accounts with significant balances would be impacted?

    Accounts with offsets were guaranteed to 250k per ADI...
     
    bunkai, 10th May, 2017
    #1
  2. dabbler

    dabbler Well-Known Member

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    ?

    How do you link this. There was no change I heard relating to the guarantee.
     
    dabbler, 11th May, 2017
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  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I doubt it

    The guarantee is one of the things that ADIs benefit from, with the logic that the banks should pay
    more for this benefit ............. just my musings

    ta
    rolf
     
    Rolf Latham, 11th May, 2017
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  4. Redom

    Redom Mortgage Broker Business Plus Member

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    This.

    Banks will just find a way to pass the cost on, i suspect lifting rates on their existing book next time they have a chance will be how they do it. Simplest and cleanest way to raise that much is to increase their margins.
     
    Redom, 11th May, 2017
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  5. bunkai

    bunkai Well-Known Member

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    Sorry All. Rushed and poorly worded. Initially when the bank levy was raised several years ago it was linked to accounts with high balances as a funding mechanism for the government guarantee for balances (1M initially, 250k now)

    The new levy applies to balances over 250k but I suppose will be applied indirectly more than likely or semi-directly via interest rates. The scenario I was envisaging was that large balances in offset accounts directly attracting the levy.

    Budget fun and games.
     
    bunkai, 11th May, 2017
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  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I ran into that the other night. Offsets are excluded. The loan liability will be counted. How the new bank tax will work

    This a bank tax - Banks can pass it on any way they like. My bet is ahigher margins on loans and maybe risk weighted. ie IP{ investors higher than owner occupiers. Also card debt etc
     
    Paul@PAS, 11th May, 2017
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  7. bunkai

    bunkai Well-Known Member

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    Good explanation - didn't realise it is calculated on most of the bank's liabilities / funding sources. Some of these happen to be deposits :)
     
    bunkai, 11th May, 2017
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  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yep.....Its a "big numbers" thing for the bank. Its balance sheet gets taxed. The components of what it comprises doesnt really matter. They seem to have learned from the mining tax and made it simple.

    The problem now is how the banks will pass it on. They will pass it on...
     
    Paul@PAS, 11th May, 2017
    #8