Consumers urged to check bank statements
The Consumer Council of Fiji is advising consumers to check their bank statements thoroughly to be sure that they have not been wrongly charged by their banks in fees and charges or when making deductions for external sources such as taxation.
Consumer Council Chief Executive Officer Ms. Premila Kumar said they received a complaint in which one of the commercial banks had charged incorrect ‘Resident Interest Withholding Tax’ on interest earned for the year ending April 2016 on a ‘Term Deposit Account’.
‘Resident Interest Withholding Tax’ is a final tax which means that the gross amount of any interest income paid to a Fiji resident by a financial institution in Fiji must be taxed at a fixed rate imposed by FRCA.
The bank has erred in charging 31% Resident Interest Withholding Tax effective from 1 January 2016, when in fact Resident Interest Withholding Tax should have been 10% for 2016 and 20% for the period 2012 to 2015.
Ms Kumar fears that many more consumers may have been affected because of this blunder by the bank.
It appears the bank had failed to adjust their system in order to comply with the change in tax rates announced during National Budget to be implemented by FRCA.
In the case at hand, the complainant was wrongly charged $280.59 instead of $90.51 on the $905.12 interest earned to his account.
She said after the Council’s intervention, the bank reversed the incorrect tax by crediting $190.07 to the complainant’s account and has also apologised for the blunder.
According to the complainant, this was not the first time the bank had applied incorrect tax rate to his account.
In 2015, his bank had made the same mistake where it deducted 31% tax rate on interest earned when the rate should have been 20%. The matter was raised with the bank then and also with FRCA and adjustments were made to his account after a lot of running around.
Ms Kumar said the Council was then informed by the bank that they have started reimbursing the affected customers.
Consumers should scrutinise their bank statements to ensure fees/charges and tax deductions have been correctly charged because there are exemptions on Resident Interest Withholding Tax.
The updated taxation rates can be accessed on the FRCA website or consumers can contact the Council for clarification.
Source Newswire, 15 Apr 2016