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With holding Tax on Interest income

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Himanshu Satija

3 Points Posted on 04 March 2023

Hi,
I am working for a Us Client which has subsidary in Cayman, Australia and New Zealand, i recently came across the transaction which does not seems to me right, The transaction is we receives interest on Bank deposit and 25% withholding tax deducted on it, As per my understanding the accounting should be Recognize intrest income by full amount and show WT as receivable in books and claim the tax paid/withheld while paying the final income tax, But we are not following like this, we are booking interest income as Income- WT, Could somebody please help me in this regards if possible plz suggest some reference material to read in IFRS.

Replies (2)

Quick Summary

This discussion addresses the correct accounting treatment for withholding tax (WHT) deducted from interest income earned from a US client with subsidiaries in Cayman, Australia, and New Zealand. The user questions the current practice of booking interest income net of WHT, suggesting it should be recognised in full with WHT shown as a receivable. Responses confirm that interest income should be booked at the gross amount, with WHT debited to a 'WT on Interest' account, which is then presented as an asset on the balance sheet. This aligns with IFRS principles for tax deductibles.