Bank Interest- RWT and implications

I have a question that hopefully someone can help with.

I am concerned that the banks are fleecing us with the withholding regime. For example the following appeared on my statement:

Balance $18,000.00
Credit Interest $30.66 $18,030.66
Debit RWT $13.80 $18,016.86


To my way of thinking there is some thing really wrong here.

Gross interest is $44.46 but the bank only pay you what the call "net interest" of $30.66 and then deduct the RWT of $13.80 from your account. This leaves you with $16.86.

Surely the bank should pay you the Gross interest, take the RWT and give that to the IRD and provide the net proceeds to your account?
Shouldn't my account be credited with $30.66 and RWT has been paid?

Thoughts welcomed.

Looks like the bank don't have (or aren't applying) your IRD Number so are deducting RWT @ 45%

Quote:

---

Originally Posted by blackcap

I have a question that hopefully someone can help with.

I am concerned that the banks are fleecing us with the withholding regime. For example the following appeared on my statement:

Balance $18,000.00
Credit Interest $30.66 $18,030.66
Debit RWT $13.80 $18,016.86


To my way of thinking there is some thing really wrong here.

Gross interest is $44.46 but the bank only pay you what the call "net interest" of $30.66 and then deduct the RWT of $13.80 from your account. This leaves you with $16.86.

Surely the bank should pay you the Gross interest, take the RWT and give that to the IRD and provide the net proceeds to your account?
Shouldn't my account be credited with $30.66 and RWT has been paid?

Thoughts welcomed.

---

No the $30.66 is the Gross interest which you have been credited with. The RWT is then deducted and sent to IRD. The rate is 45% because the bank do not hold the IRD number.

Quote:

---

Originally Posted by JeffW

No the $30.66 is the Gross interest which you have been credited with. The RWT is then deducted and sent to IRD. The rate is 45% because the bank do not hold the IRD number.

---

Thanks,

I will check with another account where I know they hold my IRD number.

It seems you are correct. The Withholding amount is 33% on my personal account.

(The example I gave came from a recently incorporated company account and it is possible IRD number has not yet been provided to the bank)

Quote:

---

Originally Posted by blackcap

Thanks,

I will check with another account where I know they hold my IRD number.

It seems you are correct. The Withholding amount is 33% on my personal account.

(The example I gave came from a recently incorporated company account and it is possible IRD number has not yet been provided to the bank)

---

You will get the excess RWT (45% less 28%) back as a refund or credit against other incomes in any case.

Happened to me recently and it’s annoying as I had to go into the bank branch to sort it out.

Quote:

---

Originally Posted by Balance

You will get the excess RWT (45% less 28%) back as a refund or credit against other incomes in any case.

Happened to me recently and it’s annoying as I had to go into the bank branch to sort it out.

---

Thanks Balance, I know I will get the difference back. There is no worry about that. I was just wondering if banks had a different regime to listed companies but it seems not.

Now that interest rates are relevant again and provide material benefits, its good to keep up with the play.

I have many younger relatives with large "cash" balances and not understanding what they are missing out on.

How did you get the Gross Interest of $44.46?

It looks to me as though the Gross was $30.66

Quote:

---

Originally Posted by blackcap

I have a question that hopefully someone can help with.

I am concerned that the banks are fleecing us with the withholding regime. For example the following appeared on my statement:

Balance $18,000.00
Credit Interest $30.66 $18,030.66
Debit RWT $13.80 $18,016.86


To my way of thinking there is some thing really wrong here.

Gross interest is $44.46 but the bank only pay you what the call "net interest" of $30.66 and then deduct the RWT of $13.80 from your account. This leaves you with $16.86.

Surely the bank should pay you the Gross interest, take the RWT and give that to the IRD and provide the net proceeds to your account?
Shouldn't my account be credited with $30.66 and RWT has been paid?

Thoughts welcomed.

---

Hi blackcap,

It is quite normal for a bank to only pay you 'net interest', such that your account only sees the 'net interest paid'. Your bank tax statement for the year should show any withholding tax paid by the bank to the IRD on your behalf. But it sounds like the bank has deducted withholding tax from your account twice: Once before the money hit your account, and again once the net interest was deposited there. That doesn't sound correct. However, is that what happened? Where did you get your numbers from?

I get a summary of income from the IRD each year. But that relies on someone from the IRD taking information they have received from the bank and putting it in the right 'box' before the statement is sent out to you. The IRD have made errors in this process before in my case confusing net interest with gross interest. So if you are relying on the IRD summary, it might pay to reconcile that with information supplied directly from your bank.

The second thing that strikes me as odd is the rate of withholding tax deducted. $13.80/$44.46 = 31%. That is not a standard deduction rate. Are you sure that $13.80 has been deducted from the account concerned? Or did you have another investment with the bank that matured 'gross', which then got deposited into the account you are talking about, and the RWT of $13.80 applies to that now closed investment, not the account you are talking about? There are a couple of avenues you can investigate.

HTH

SNOOPY

Quote:

---

Originally Posted by 777

How did you get the Gross Interest of $44.46?

It looks to me as though the Gross was $30.66

---

I did not get Gross interest of $44.46, I was surmising. I just added what the bank called Credit interest with the RWT. But in hindsight I see I was wrong.

I was unaware of the implication of not having provided the IRD number. Yes Gross Interest is $30.66 and the high RWT is due to no IRD number.
The bank called the $30.66 amount Credit interest so that also threw me off. They would be better off describing it as Gross Interest.

Quote:

---

Originally Posted by blackcap

I did not get Gross interest of $44.46, I was surmising. I just added what the bank called Credit interest with the RWT. But in hindsight I see I was wrong.

I was unaware of the implication of not having provided the IRD number. Yes Gross Interest is $30.66 and the high RWT is due to no IRD number.
The bank called the $30.66 amount Credit interest so that also threw me off. They would be better off describing it as Gross Interest.

---

ChatGPT, please translate the following from my bank:

Balance $18,000.00
Credit Interest $30.66 $18,030.66
Debit RWT $13.80 $18,016.86

"Your $18000.00 earned $30.66 interest last month, $13.80 of which was deduced in tax (at the 45% rate as the bank does not hold your IRD number) and paid to IRD on your behalf, with the balance of $16.86 credited to you. Your new balance is $18016.86"