Private ruling: Assessable income - interest
Date of advice: 18 March 2021
Published: May 2021
Ruling period: Year ended 30 June 2018 | Year ended 30 June 2019
Date scheme commenced: 1 July 2017

Ruling: Q1: Does the interest accrued on your bank account form part of your assessable income? | A1: Yes.

Relevant facts and circumstances: Your home was lost in the Bushfires. You and your spouse had insurance cover over the home. You and your spouse made an insurance claim for the damage to the home, which was accepted. Your insurance payout was deposited in a bank account. There were delays with the new build process. You accrued interest on the bank account.

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) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. Ordinary income has generally been held to include interest income and the general principle is that interest is derived when it is received or credited. Interest income is assessable as ordinary income under section 6-5 of the ITAA 1997. In your case you derived interest income on a bank account. You had a legal and beneficial interest in the funds in the bank account. Therefore, you are assessable on 100% of the interest income on the bank account.