Interest relating to bank deposit / loan / trade debt

Key requirements

Bank-deposit, loan and overdue-trade-debt interest represents payment for a financial service. Interest from a local entity is an exempt supply and belongs in Box 3, with no output GST. Interest from an overseas bank or company qualifying as an international service is zero-rated and belongs in Box 2 instead. The distinction matters for supply classification and associated input-tax analysis, despite both cases having no tax collected. Interest expense paid to others is not a taxable purchase and is not reported in Box 5. Identify the payer’s local or overseas status and reconcile the interest records to the correct return category rather than netting income and expense or leaving all interest out of GST reporting.