Joint term deposits

A joint term deposit is a single deposit with more than one account holder. The bank pays one rate on the whole sum. The signing arrangement, whether one holder can act alone or all must agree, is set when the account is opened under the bank’s terms.

The ATO says to declare only your share of the interest on a joint account, normally half each for two holders. If the money is not held in equal shares you can declare it in the actual proportions, but you will need to be able to show them. At least two holders need to quote a tax file number, or the bank withholds tax on the whole interest payment at the top marginal rate plus the Medicare levy once it reaches $120 in a year.

For the Financial Claims Scheme, APRA splits a joint deposit equally between its holders and adds each holder’s share to their other deposits at the same institution before applying that holder’s $250,000 limit. A joint account does not create an extra limit on top of a holder’s sole accounts.

The product’s notice and interest-reduction rules apply as they would to a single holder, and where the account requires all holders to sign, all must agree. The signing arrangement is easier to settle when the account is opened than when the money is needed.