Interest is taxed at your marginal rate in the year you receive it. Deposits up to $250,000 per person per authorised bank are protected by the Financial Claims Scheme.
FAQ
How much interest on $50,000 at 4.2% for 12 months?
$2,100, or $1,428 after tax at a 32% rate.
Sources (checked 6 November 2026): APRA Financial Claims Scheme; ATO individual income tax rates 2026-27; Medicare levy; low income tax offset.