Recording interest charged on overdue income tax

Interest charged on overdue income tax isn’t an expense.

This means that if your client hasn’t paid their income tax on time and has been charged interest on the outstanding amount, you should add the interest to the amount of income tax they’re paying (this may be under Assets or Liabilities). Don’t add it as an expense.

Have the client add the amount as either an A+ or a D+ depending on how their accounts are set up. They’ll clear this account when they send a payment to the Canada Revenue Agency.

Last updated on March 7, 2014 by FCC AgExpert