Withholding Tax on bank account interest

Hi, can anyone advise the best/correct method.
I have a bank account that pays interest monthly. I get credited the full interest then immediately deducted withholding tax. This shows on the monthly bank statement. At the end of the year I get a certificate from the bank confirming the amount of WT deducted.
What is the correct method for showing this in manager. Should I show each month the total received as “Interest Received” under income. Then should I show the WT deducted as Tax Paid immediately or should I show it as Withholding Tax under assets and then make an annual journal entry to tax paid when the certificate is received?

I suggest you do that. This is because, the WHT deducted is a receivable until the certificate is received.

Also read the Guide: Account for withholding tax on sales invoices | Manager. Your situation does not match either the sales invoice or purchase invoice process described, because you are neither selling nor buying anything. But, as @Abeiku wrote, the tax withheld by the bank is a receivable asset. If you are already required to withhold tax on behalf of your customers, you will have the automatically created accounts mentioned in the section on sales invoices. The tax withheld by the bank should be posted to the Withholding tax receivable account, in the same way it would be if it was being withheld by a customer. Then make the transfer to Withholding tax after receiving the certificate and draw down that account when applying the balance to your tax due.

In other words, if you are already involved with withholding taxes, you can use the same asset accounts used with your own customers. On the other hand, if under your local law you will never apply withholding taxes on your own sales invoices to customers, you will need to create similar accounts on your own.

Many thanks for the advice. I was on the right track, although I can’t see how to show in Withholding tax receivable account. I can place directly in Withholding tax account but there is no tab in the receipts and payments for Withholding tax receivable account.

You are right. The program only accepts automatic postings to Withholding tax receivable from the sales invoice process. So you will need to create an ordinary asset account for that purpose.

(Most automatic tax-related accounts were done away with several months ago. If you had anything in them, they were converted to ordinary accounts. I thought that one had been included, too, but obviously not.)