Want to ask a tax related question about Term Deposit and stuff. Hope some people here can give me a heads up. Have emailed Inland Revenue and my bank about this, but would like to see comments and suggestions from you guys. As I often from their replies to be un-helpful.
== Note all figures are hypothetical==
Situation: 3 People (X ,Y & Z) open a term deposit account together. Interest earned will be split evenly among the 3 of them. How would the tax be deducted and reported to the IRD?
Currently this is how I think it'll work, I need you guys to tell me whether or not this is correct
Term deposit account is open under X's IRD number.
Interest gained: $1000
Tax is 10%: $100 (10% of $1000)
Interest after tax: $900 ($1000 - $100)
Split among 3 people: $300 each.
Now do X deduct $33.33 from Y and Z? If so, should that deduction be reported to the IRD and what would this deduction be classified as?
Now assuming the above is correct, which will result each person to walk away with $66.67. Now would each person pay tax on this earning, the $66.67?
So is this how it work?
Comments or suggestions will be great.
Thank you ^^