Interests
The Interest on Funds row shows the income your maintenance fund earns from the money held in the account.
It is based on the average balance of the fund during the year, reflecting a realistic estimate of the interest earned over time.
How it’s calculated
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Average balance: The system calculates the average of the opening balance and the closing balance for the year.
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Interest rate on funds: The average balance is multiplied by the interest rate you set in the settings.
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Corporate tax rate: Tax is deducted from the interest earned, leaving the net interest that actually contributes to your fund.
Formula (simplified):
Net Interest = (Opening Balance + Closing Balance) ÷2 × Interest Rate × (1 − Corporate Tax Rate)
Net interest
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Gross interest – the total interest earned before taxes
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Tax on interest – the corporate tax applied to interest
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Net interest – the remaining interest after taxes, which increases your fund’s available balance
This ensures your cashflow projections reflect the real growth of your fund, not just the theoretical interest.
Example
| Item | Amount |
|---|---|
| Opening Balance | $50,000 |
| Closing Balance | $52,000 |
| Average Balance | $51,000 |
| Interest Rate | 2% |
| Gross Interest | $1,020 |
| Tax (28%) | $285.60 |
| Net Interest | $734.40 |
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The $734.40 is the net amount added to the fund for the year.
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This value is then used when calculating contributions and closing balances.