Beginners

[Nor]

Thinking some more it gets even weirder. The figure at Q7 of this form has to be included in Other Income in one's IR3 tax return - it includes interest earned in current year - which IRD will already have recorded in one's dividends or interest received.

So double taxed, unless you alter the IRD figures, and then you have to provide documentation justifying changing them.

[Snoopy]

So double taxed, unless you alter the IRD figures, and then you have to provide documentation justifying changing them.

Or they could be insufficiently taxed. So you have to provide documentation to justify changing the IRD figures. You have a problem with that? What did you expect?

I think an arrangement came in a few years ago that if you buy a bond on market you have a responsibility to equalize your income tax payments over the life of the bond, assuming you hold that bond to maturity (whether or not you actually plan to hold that bond to maturity). I don't think the bond issuer does this interest adjustment calculation for you. So that is another reason why your income tax due on a bond may not be the same as the income tax deducted by the bond issuer.

There are bond funds out there that do all this tax stuff for you. They have the disadvantage of management fees, and you being unable to select the maturity profile of the constituent bonds held. But they have the advantage of you being taxed at worst, at the maximum PIE tax rate of 28%.

SNOOPY