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New Zealand law explained for everyone

Income Tax Act 2007

Timing and quantifying rules - Income equalisation schemes - Interest

EH 6: Interest on deposits in main income equalisation account

You could also call this:

“Earning interest on deposits in a main income equalisation account”

If you put money into a main income equalisation account, you might get interest on it. Here’s how it works:

If you take your money out within a year of putting it in, you won’t get any interest.

For all other deposits, you’ll earn interest. The interest is worked out every day from when your deposit is received until you take it out.

The interest keeps adding up until 31 March each year or until you take your money out, whichever comes first.

Any interest you earn gets added to your deposit, so your account balance grows.

The interest rate is 3% per year.

Remember, this is just about the interest on your deposits. There are other rules about how these accounts work that aren’t covered here.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514831.

Topics:
Money and consumer rights > Taxes
Money and consumer rights > Banking and loans
Money and consumer rights > Savings and retirement
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EH 5: Main income equalisation account, or

“Account for storing and managing income deposits for tax purposes”

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EH 7: Deduction of deposit, or

“How to claim a deduction for deposits into the main income equalisation scheme”

Part E Timing and quantifying rules
Income equalisation schemes: Interest

EH 6Interest on deposits in main income equalisation account

  1. No interest is payable on a deposit in a main income equalisation account that is refunded within 1 year of the date of deposit.

  2. Interest is payable on every other deposit in a main income equalisation account.

  3. Interest is computed with daily rests from the date of acknowledgment of the receipt of the deposit until the date the deposit is refunded.

  4. Interest on a deposit accrues until the earlier of—

  5. 31 March in each year; and
    1. the date the deposit is refunded.

      1. Accrued interest on a deposit is added to the deposit.

      2. The interest rate is 3% a year.

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