IR Schedules New Zealand interest

If you’ve broken a term deposit during the year, you may have “negative interest” to account for. This is interest you’ve repaid on the term deposit. It may reduce the amount of interest you need to declare on your tax return.

If you broke the term deposit in full, use the worksheet below to deduct the negative interest from the gross interest amount shown on your Deduction certificate for RWT on interest (IR15) or equivalent statement. In all other cases, the negative interest is deductible in a later tax return when the term deposit matures.

During the year, RWT will have been deducted from some or all of your interest and you can claim a credit for this.

The interest payer will usually send you an IR15 or similar statement which shows the gross interest paid and the amount of RWT deducted.

Add up the amounts from each statement or certificate and print the totals in Boxes 13A and 13B.

Don’t send Inland Revenue your statements or IR15s, but keep them in case they need to see them later.

If the interest you received for the year is $50 or less, you may not receive a certificate or statement, but you still need to show the gross interest and RWT. Get the details from your bank statements.

If you hold a joint account, you must show your share of the interest in your tax return.

If you received interest from overseas, convert your overseas interest and tax credits to New Zealand dollars and show it at Question 17. Please read the notes at IR3 Question 17 Overseas income.

If you received interest from a farm vendor mortgage or farm vendor finance bonds approved by the Rural Banking and Finance Corporation of New Zealand, only half of the interest is taxable. Show the RWT deducted and the taxable amount of interest in Boxes 13A and 13B.

If you are a party to a financial arrangement, such as government stock, local authority stock, mortgage bonds, futures or deferred property settlements, you may have to calculate the income or expenditure from the financial arrangement using a spreading method, rather than on a cash basis. To determine whether a spreading method must be used, see “Financial arrangements”.

If the financial arrangement matures, is sold, remitted or transferred, a “wash-up” calculation, known as a base price adjustment, must be made.

Any RWT will have to be deducted on a cash basis. Show the RWT deducted and any income from the financial arrangement in Boxes 13A and 13B.

If Inland Revenue pay you interest because you overpaid your tax, include the gross interest in Box 13B in the income year you received the interest.

If you paid Inland Revenue interest because you underpaid your tax, include it as a deduction in the return at Question 26 for the income year the interest is paid.