Negative deposit account in the corporate scheme — a tool that limits deductions for private interest expenses and which may result in an increase in tax

You are barred from being able to save in the company scheme if the deposit account is negative

It is allowed to recognize private debt in the enterprise scheme, thereby obtaining a deduction for private interest expenses in personal income. However, the deposit account must be positive before it can pay off. In the future, if the deposit account becomes negative, you are prevented from being able to save in the company scheme.

If the deposit account becomes negative

If the deposit account and the capital return base turn negative, an amount called interest correction must be recognized in the personal income. This means that 3% (current rate for 2018) of the basis for calculating the interest rate correction, must be deducted as capital income and added as personal in income.

The deposit account can provide an increased tax

Thus, in two ways, a negative deposit account can provide an increased tax. Be careful and talk to your accountant about it.

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