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The short answer
If you are an Australian resident for tax and not a temporary resident, you declare interest from Nigerian bank accounts and fixed deposits as foreign income, converted to Australian dollars, and can claim a foreign income tax offset for the Nigerian tax withheld, commonly 10%. Declare the gross interest, before tax. Temporary residents generally do not declare it: the ATO's own example says foreign bank interest need not be declared.
Do you need to declare it?
- Australian resident, not a temporary resident: yes. The ATO's investment income page (updated 8 June 2026) says residents declare interest, including foreign-source interest, and its foreign income page lists "interest from bank deposits or bonds".
- Temporary resident: generally no. The ATO says most foreign income of temporary residents is not taxed, and gives foreign bank interest as an example that need not be declared.
- Foreign resident: no, only Australian income.
Not sure which you are? See the residency tests.
How Nigeria taxes the interest
Nigerian banks deduct withholding tax from interest before paying it. PwC's Nigeria withholding tax summary (reviewed 29 May 2026) gives 10% on interest for residents and non-residents. Because there is no Australia-Nigeria tax treaty, no reduced treaty rate is available. Your statement or a separate certificate from the bank should show the gross interest, the tax deducted and the net amount credited. If it does not, ask the bank for a withholding tax certificate; that is your proof for the ATO. For the Nigerian rules, see withholding tax on interest in Nigeria.
Converting naira interest to Australian dollars
The ATO says you must convert all foreign income, deductions and tax offsets to Australian dollars. Its translation rules say ordinary income is translated at the earlier of when it is derived or received, and allow average rates in many cases. The ATO publishes monthly and year-end rates for selected currencies and says that for a currency not in its tables you may use any reasonable externally sourced rate. Write down the rate and its source for each conversion, and convert the tax withheld at the same rate as the interest it came from.
Worked example
Example only, with invented figures. Emeka, an Australian resident and not a temporary resident, has a naira fixed deposit that pays interest twice in the Australian income year.
| Payment | Gross interest | 10% withheld | Example rate | Gross in AUD | Tax in AUD |
|---|---|---|---|---|---|
| October | ₦300,000 | ₦30,000 | ₦1,000 per A$1 | A$300.00 | A$30.00 |
| April | ₦300,000 | ₦30,000 | ₦1,050 per A$1 | A$285.71 | A$28.57 |
| Total | ₦600,000 | ₦60,000 | A$585.71 | A$58.57 |
Emeka declares A$585.71 as foreign interest and claims A$58.57 as a foreign income tax offset. The claim is under $1,000, so under the ATO's rule he does not need to work out the offset limit first; the offset may still differ from the tax paid. Using the naira amounts actually credited, ₦270,000 each time, would understate both the income and the offset.
Situations that need extra care
Interest rolled into a fixed deposit
When a Nigerian fixed deposit matures and the bank rolls the interest into a new deposit, you may never see the money, but it has still been credited to you. Treat the rollover date as the date the interest was received unless your tax agent advises otherwise, and convert it then.
Domiciliary account interest in US dollars
Interest on a Nigerian domiciliary account is paid in dollars, not naira. The conversion is then from US dollars to Australian dollars, so check the ATO's published rate tables for that currency before reaching for an external source.
Joint accounts
If the account is joint with a spouse or parent, the interest is not automatically all yours. Declare your share and keep a note of how you worked it out; a tax agent can confirm how the ATO expects it split in your case.
Where it goes on the return
Foreign interest goes in the foreign income part of your return, not with Australian bank interest, and the offset is claimed separately. The ATO's instructions and myTax for the year show the exact item; check them, because labels can change between years. If you use a tax agent, give them the gross figure, the tax withheld, the conversion rates and the bank's evidence.
Records to keep
- Bank statements or deposit certificates showing gross interest and tax deducted.
- Any withholding tax certificate issued by the bank.
- The exchange rates you used and their source.
- Notes on the Australian income year each payment falls in (1 July to 30 June).
The ATO says investment records are generally kept for five years after it processes your return. For the offset rules in full, see claiming the FITO for Nigerian tax.
Where Pryme fits
Pryme Savings Boxes hold naira in Nigeria, with rates shown in the app; any interest they earn is Nigerian interest for these purposes. Your account statements show what was credited, and a verifiable statement through VerifyDoc.ai gives your tax agent a record they can check is unaltered.
Questions people ask
Do I need to declare interest from my Nigerian bank account?
Yes if you are an Australian resident and not a temporary resident. Temporary residents generally do not: the ATO's example says foreign bank interest need not be declared.
Do I declare the gross or net interest?
The gross amount, before Nigerian withholding tax, then claim the tax as a foreign income tax offset.
What exchange rate do I use for naira interest?
Follow the ATO's translation rules: the rate when the interest is derived or received, or an allowed average. For currencies not in the ATO tables, a reasonable external rate is accepted.
How much tax do Nigerian banks take from interest?
PwC's summary (reviewed May 2026) gives 10% withholding tax on interest. There is no treaty rate for Australian residents.
Sources
- ATO: Investment income (updated 8 Jun 2026) · accessed Oct 2026
- ATO: Foreign and temporary resident income (updated 8 Jun 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, withholding taxes (reviewed 29 May 2026) · accessed Oct 2026
- ATO: Translation (conversion) rules · accessed Oct 2026
- ATO: Foreign exchange rates overview (updated 14 Aug 2026) · accessed Oct 2026
- ATO: Keeping good investment records (updated 22 Jun 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.