Private ruling: Assessable income
Date of advice: 3 February 2025
Published: 17 March 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can the prefilled bank interest for the term deposit account be excluded from your income tax return? | A1: No.

Relevant facts and circumstances: You have a term deposit in your name. The term deposit derived interest income in the income year which was prefilled into your tax return. The money in the term deposit is your child's. Your child does not have a TFN and will not declare the interest in the income year. Going forward you will obtain a TFN for your child and the term deposit will be in your child's name and they will declare any interest in their tax return.

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, except if an amount is exempt income (section 6-15). Section 6-5 of the ITAA 1997 requires you to declare any income derived by you in your tax return for the relevant year. Interest income is assessable income and must be declared in your tax return. In your case you are the legal owner of the term deposit as you are the named person on the account. Tax must be paid on this income and as you are the named person on the account you are required to pay the tax on the account. You are not able to exclude this income from your tax return. The income may belong to your child, but someone is required to pay tax on the interest income in the income year and if your child does not have a TFN and will be lodging a return then tax will not be paid on this income if it is excluded from your return. As the legal owner of the account in the income year you are required to pay tax on the term deposit income in the income year under Section 6-5 of the ITAA 1997.