Private ruling: Interest income
Date of advice: 18 February 2016
Published: April 2016
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is 100% of the interest income from the bank accounts held in your name only included in your assessable income? | A1: No. | Q2: Is 50% of the interest income credited to your bank accounts before the given date included in your assessable income? | A2: Yes. | Q3: Is your total assessable interest income from the bank accounts $x? | A3: Yes.


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

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources during the income year. Ordinary income has generally been held to include interest income. Taxation Determination TD 92/106 Income tax: who should be assessed to interest earned on a joint bank account? 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. Similarly, on an individual account, the associated interest income generally belongs to the account holder unless there is evidence to the contrary. In your case, you opened accounts in your name only as your spouse was unable to sign and the bank would not put joint names on the relevant accounts without their signature. The funds in the account were from the jointly held term deposits. Based on the information provided, it is considered that the funds belonged to both you and your spouse. Therefore 50% only of the associated interest income received before your spouse's death should be declared on your relevant income tax return. The interest received after your spouse's death belongs fully to you.

Relevant facts: The arrangement that is the subject of the Ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are: | • the application for private ruling and | • bank statements and information. | You and your spouse had all your bank accounts in joint names. | Your spouse became ill and was unable to sign. | When the jointly held term deposits matured, the money was transferred to bank accounts held in your name only. This was because the bank would not allow a joint account to be opened without your spouse's signature. | Your spouse is now deceased.