Private ruling: Assessability of dividend income
Date of advice: 4 August 2015
Published: August 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you assessable on dividends received from shares held by a superannuation fund? | A1: No.

Relevant facts and circumstances: You and your spouse were trustees of a superannuation fund ('the Fund'). When the Fund purchased shares in Company X you provided the tax file number (TFN) of the Fund, yourself and your spouse. There was a change in the trustees of the Fund and you updated the ownership of the shares. As part of this process you provided the new trustee's TFNs to Company X. During the 2014-15 financial year, the Fund received dividends from Company X. The dividends were deposited into the Fund's bank account and cannot be withdrawn by yourself or the other trustees.

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. Taxation Determination TD 92/106 provides the Commissioner's view on who should be assessed to interest earned on a joint bank account. Although TD 92/106 specifically considers bank accounts, the principles are equally applicable to dividend income which is received from shares held jointly with a minor. TD 92/106 states that interest income on a joint bank account is assessed to the persons who are beneficially entitled to the income. 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. Evidence relevant in determining an individual's 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 the case of dividend income, who controls decisions regarding the shares in a relevant factor. In your case, shares are held in the name of the Fund but have had other entities' TFNs recorded against them on the share register. The Fund purchased the shares and retain ownership and use of the dividends. Based on this information, it is considered that the Fund is the sole owner of the shares and any resultant dividend. Therefore the full amount of any dividends received from these shares will not form part of your assessable income. The dividends should be declared in the Fund's tax return.