Onshore vs. Offshore Returns - Cash Deposits
A question which often arises is whether to place excess cash in an Australian or offshore term deposits. There isn't a simple answer because the situation is dynamic and there is a need to review your situation regularly. However, it is wrong to simply assume that offshore deposits offer better terms simply because they avoid the payment of the 10% withholding tax (WHT) applicable to interest earned in Australian by non-residents. In fact, the pattern apparent over the last decade is that offshore banks - whether Australian or foreign - offer poor cash returns compared to those available onshore in Australia
As an example, consider the table below which compares the interest rates available in mid October 2019 on a term deposit of AUD50,000, and note that the margin differentials are typical - and often increase in higher interest rate environments
|Interest Rates : AUD100,000 on Term Deposit for 12 months
Interest paid annually : March, 2020
Domestic Rates vs. Offshore Asia Rates
Previously, we had contrasted domestic term deposit rates with those offered by ANZ in Singapore. However, typical of the Australian banking's commitment to our largest trading market, ANZ sold their wealth and retail banking businesses to Indonesia, China, Hong Kong, Taiwan and Singapore to DBS Bank at the end of 2017. We now include a comparison with the rates offered by DBS.
In any event, a detailed comparison should be made before committing your funds, and if your cash amounts are are substantial we would suggest contacting us to arrange appropriate financial planning advice.