Income Tax Act 2007 section 875

Interest paid by building societies

Section 875 provides an exception from the general duty to deduct income tax at source when interest is paid by a building society.

• Building societies are generally exempt from the duty to deduct income tax at source from interest payments under section 874.
• The exception does not apply where the interest is treated as yearly interest under section 874(5A) — in that case, tax must still be deducted.
• Deduction obligations for building society interest payments are instead dealt with under separate provisions in Chapters 2 and 4 of Part 15 of the Act.
• This section corrects an earlier drafting defect in the predecessor legislation (section 349(2) of ICTA) and clarifies which regime governs building society interest deductions.