Private ruling: Interest income
Published: May 2012
Ruling period: Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2008

Ruling: Q1: Is interest received on a frozen bank account assessable at the time that it is credited to the account by the bank? | A1: Yes


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

Reasons for decision: Detailed Reasoning - Detailed reasoning: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that if you are an Australian resident, your assessable income includes the ordinary income you derived directly or indirectly from all sources during the income year. Interest income is considered to be ordinary income. Taxation Ruling TR 98/1 covers the derivation of income and at paragraph 47 it is provided that interest is only derived, or arises, when it is received or credited. In your case the interest is ordinary income which is assessable in the year that the bank account was credited with the interest amounts. The fact that the bank account could not be accessed for a period of time does not alter the fact that the interest income is assessable in the year it was credited.

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. | Relevant facts: You have a jointly owned bank account. | This account was frozen by the court. | You had no access to the bank account funds. | The financial institution paid monthly interest into the bank account.