Private ruling: Interest earned on joint account
Published: July 2011

Ruling: Q1: Is interest earned from a jointly held investment account assessable according to your beneficial ownership of the monies in the account? | A1: Yes .


Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2).

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 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. Taxation Determination TD 92/106 provides guidance on who should be assessed to interest earned on a joint bank account. Interest income is assessed to the persons who are beneficially entitled to the income (MacFarlane v. FC of T 86 ATC 4477 at 4486-7; (1986) 17 ATR 808 at 819-20)). That entitlement depends on the beneficial ownership of the monies in the account. The principle outlined in TD 92/106 applies in your case. The interest earned on the account was while it was in the joint names of the account holders. The general presumption is that holders of accounts in joint names have joint beneficial ownership of the monies 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). The sort of relevant evidence includes information as to who contributed to the account, in what proportions the contributions were made, and the nature of the contributions.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Relevant facts: You are a joint holder in an investment account. | All account holders are required to sign to operate the account. | When the deposit matured in the recent year, it was reinvested for a fixed term, along with the interest accrued. | Later in a subsequent year the investment and interest accrued were again reinvested for a fixed term. | The monies invested were in the names of the individuals, and they were not from or attached to a trust or any other instrument.