Private ruling: Assessability of foreign income
Published: October 2014
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Question and answer | Are you required to declare the interest earned on a bank account overseas in your tax return in the year it is derived? | Yes.

Relevant facts and circumstances: You are an Australian resident for taxation purposes. You received money from an estate overseas. This money is in a bank account overseas. You cannot access this money until your parent passes. You are accruing interest on this account.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6-5

Reasons for decision: Summary: Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of an Australian resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Under subsection 6-5(4) of the ITAA 1997 a taxpayer is taken to have received an amount of ordinary income when the amount is applied or dealt with in any way on the taxpayer's behalf or as the taxpayer directs. Interest is generally derived when it is received or credited (paragraph 47 of Taxation Ruling TR 98/1 Income tax: determination of income; receipts versus earnings). Accordingly you are taken to have received, and therefore derived, the interest, ordinary interest or otherwise, as soon as it is derived. The interest is considered to be 'ordinary income' and, as such, is assessable under section 6-5 of the ITAA 1997 in the income year that it is derived.