Reporting of TFN Withholding Deductions

Hi,

It has come to my attention that BGL360 reports net income for interest, dividends and trust distributions where there was TFN Withholding Tax deducted on the payment.

This reporting of the net income received results in a situation whereby you have an investment paying the same dividend across two years, but in the prior year there is withholding tax on the dividend (because the TFN was not yet reported) and therefore in the financials it appears there was an increase in income for the year, and the tax expense is also different.

My understanding of the correct way this should be accounted for is that the gross dividend/trust distribution etc is shown as income in the financials, with a debit entry for any tax withheld against the tax payable/refundable in the balance sheet. This method results in the income and the tax expense being the same across two years where there was the same dividend payment with TFN withholding only in one year.

I am curious to know what other opinions are on this.

BGL’s advice is as follows, I agree with the imputation credits not being grossed up, but TFN?

https://360help.com.au/display/doc/TFN%2C+Foreign+and+Imputed+Credits+not+included+in+income+amounts

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Totally agree with you.

It would be much easier to check bank interest on the financials if the TFN withheld were added on as well.

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