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which tax year for interest income?

Discussion in 'Accounting, Tax & Legal' started by pthm, 13th Jul, 2006.

  1. pthm

    pthm Well-Known Member

    Joined:
    25th Aug, 2005
    Posts:
    136
    This may sound to be a silly question, but appreciate your views on this. Thanks.

    I have a cash management account which pays monthly interest, payable the 1st day of the new month. For example, the statement shows that I received $105.25 as interest to 30jun06, but the date that amount credited to the account was 01jul06. So, should I declare $105.25 as income for tax year ended 30jun06 or for the tax year ended 30jun07?

    I have a normal savings account with another institution which pays monthly interest, but payable on the last day of that month. For example, the statement shows that I received $21.49 as interest for the month of June 2006 and the date that amount credited to the account was 30jun06. So, I declare $21.49 as income for tax year ended 30jun06.
     
  2. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    I'm pretty sure that for interest it's the day of actual receipt. Your bank/CMT provider should give you something saying how much interest you earned for the year.

    Cheers
    N.
     
  3. pthm

    pthm Well-Known Member

    Joined:
    25th Aug, 2005
    Posts:
    136
    Thanks, Nigel. I will check the statement when it arrives to see if it says how much interest was paid during the year and reconcile that against my spreadsheet. I will report back if the institution includes the interest amount earned or payable for tax purposes.