The Minister for Financial Services & Regulation, Joe Hockey, has asked the consumer watchdog to make sure Australians get the full benefits of tax cuts on banking.
The Minister will prescribe the abolition of Financial Institutions Duty (FID) under Part VB of the Trade Practices Act.
"Because of the introduction of the GST on the 1 July last year, in just 24 days time, Financial Institutions Duty will be abolished," the Minister said.
"This tax on bank deposits currently raises around $1.2 billion each year and it is charged at a rate of 6c for every $100 deposited at the bank.
"Its an insidious tax because it is a tax on saving. Its an insidious tax because its a tax on mortgages, and its an insidious tax because its more paperwork for small business.
"Its abolition on 1 July represents a saving to every Australian of an average $63 a year.
"FID will no longer be a cost to business, so businesses may need to adjust their prices so that they do not increase their net dollar margin.
"So it is crucial that this FID saving is passed onto consumers so accordingly we are providing consumers with the full protection of the ACCC.
"This is the same consumer protection that applied when the GST was introduced last year.
This ensures that the ACCC can impose fines of up to $10 million for companies and $500,000 for individuals that fail to pass on this tax cut to consumers.
"Add this to the 5 million Australians that now have fee-free banking and it becomes obvious that for the first time in many years everyday Australians have a real incentive to save money.
"This is good news for our country and good news for all Australians."