Private ruling: Investment income - Bank accounts/Joint names
Published: January 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you assessable on the interest income from accounts where you are listed as a joint account holder? | A1: No

Relevant facts and circumstances: You and a family relative opened joint bank accounts. The family relative closed previous bank accounts and transferred the funds to new joint accounts. You have not contributed any money to these accounts. The new accounts were opened to avoid the burden and cost of probate in the event of the family relative's death. Other than this, you will only access the account on the family relative's instructions if the family relative becomes housebound.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5.

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) specifies that residents of Australia are assessable on income derived from all sources in and out of Australia. Interest income is considered ordinary income and therefore is assessable under section 6-5 of the ITAA 1997. Taxation Determination TD 92/106 which deals with who should be assessed to interest earned on a joint bank account, states at paragraph 1 that interest income on a joint bank account is assessed to the persons who are beneficially entitled to the income ( MacFarlane v FC of T 86 ATC 4477; (1986) 17 ATR 808). The entitlement depends on the beneficial ownership of the money in the account. The general presumption is that holders of accounts in joint names have joint beneficial ownership of the moneys in equal shares. This presumption is rebuttable by evidence to the contrary (see Case Z7 92 ATC 131; AAT Case 7675 (1991) 22 ATR 3591). Evidence relevant in determining an individuals beneficial entitlement includes information as to who contributed to the account, in what proportions the contributions were made, who drew on the account, who used the money and who the interest is distributed to. In your case, all the funds in the account belong solely to the family relative and you have no entitlement to personally receive any money from this account. You are only a joint holder in order to have access to the account in the event of the family relative's death. In these circumstances, you have no beneficial entitlement to the money held in the accounts and therefore you are not liable to taxation on the interest income in respect to these accounts.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.