Enter the deposit, the rate, the term and how interest is credited, and this works out what it earns before and after tax.
The tax rate is an input because entity rates depend on turnover and on the composition of income, neither of which a deposit amount can establish.
Works out interest, maturity value and effective return on a term deposit held by a business, before and after tax at the rate that applies to the entity.
How interest is credited
Interest paid out at maturity never compounds. Interest credited and retained compounds at whatever cycle it is credited on, and over a few years the two differ materially.
Tax rate on the interest
The rate applying to this entity. Getting it from the entity’s accountant is better than assuming a headline figure that may not apply.
The headline is interest after tax, because that is what the entity actually keeps. The gross figure is shown beside it so the size of the tax is visible rather than absorbed.
The two effective annual returns — before and after tax — are the figures to compare against alternatives. Comparing a gross deposit rate against a net return elsewhere is not a comparison.
On a deposit credited at maturity, the effective return equals the nominal rate. Anywhere it exceeds it, compounding is the reason.
Every figure below is computed by the same calculator on this page, from the inputs described. Nothing here is typed in by hand, so an example cannot disagree with the tool.
The effective return before tax equals the nominal rate, because nothing compounds. After tax it is materially lower, which is the figure worth comparing against alternatives.
The effective return now exceeds the nominal rate, which is compounding doing its work. Over three years the difference against a maturity-paid deposit is real money.
Interest paid at maturity is simple: the principal never grows during the term, so interest accrues on the original amount only.
Interest credited and reinvested compounds at its cycle, and the maturity value is the principal grown at the periodic rate for the number of periods.
Tax is applied to the interest earned at the rate entered. Nothing else about the entity’s position is considered.
The deposit runs to maturity
Breaking a term deposit early normally attracts a reduced rate and sometimes a fee. Neither is modelled.
One flat tax rate
The rate you enter is applied to the interest and to nothing else. This is not an entity tax calculation and does not consider losses, franking or any other income.
Interest is assessed when derived
Applying the tax at the end is a simplification. Interest credited during a term is generally assessable in the year it is derived, not the year the deposit matures.
Not a comparison of institutions
Deposit rates vary between institutions and by amount and term. This works out what a rate you have been offered produces.
Works out the interest and maturity value on a term deposit, with interest reinvested or paid out at maturity.
Shows how a balance grows over time with regular deposits and compounding interest.
Compares the tax on the same profit held personally, in a company, or in a trust distributed between two adults — using the statutory scale for the individuals and a company rate you set.
This calculator can be embedded on a business website, branded to match it, with a call to action that sends the enquiry to that business rather than collecting anything here.