Private ruling: Income - investments - interest on funds held in trust
Published: October 2012
Ruling period: Year ended 30 June 2010. | Year ended 30 June 2011. | Year ended 30 June 2012. | Year ended 30 June 2013. | Year ended 30 June 2014.
Date scheme commenced: Year ended 30 June 2010.

Ruling: Q1: Are you assessable on the interest derived on the funds you hold on trust for your sibling? | A1: No.

Relevant facts and circumstances: Your sibling has a mental disability. You are your sibling's guardian. Funds were set aside from your parent's estate for the benefit of your sibling. The funds are to be used for your sibling's funeral or expenses associated with providing residential aged care for them until death. When both your parent's passed away the funds were renamed and invested under your name as trustee for your sibling These funds are in a term deposit on a roll over basis where they earn interest income. You have provided a Financial Statement which shows the account has been recorded as acting for your sibling. There is no formal trust agreement. Your sibling was not awarded any specific beneficial portion through the estate due to their ability not to manage finances correctly. The withdrawal of these funds will be appropriately documented and evidenced as solely for your sibling's benefit. Centrelink have requested a ruling before they will accept your sibling as the funds owner for pension purposes.

Relevant legislative provisions: Income tax Assessment Act 1997 section 6-5.

Reasons for decision: Summary: Interest income is assessable for the person who has the beneficial ownership of the funds. The funds including interest income earned are for the benefit of your sibling because they will be used solely for them. The Commissioner accepts that the beneficial owner of the funds is your sibling and that you hold these funds in their name as trustee for their benefit. Therefore interest earned is part of their assessable income and not yours.

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