Private ruling: When income from jointly held assets should be declared
Published: July 2012
Ruling period: For years ended 30 June 2009 to 30 June 2012
Date scheme commenced: 1 July 2008

Ruling: Q1: Should the dividends and rental income be declared by the individuals in accordance with their income years rather than by the partnership in accordance with its substituted accounting period (SAP)? | A1: Yes.


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

Reasons for decision: Summary: Generally, the Commissioner requires individuals to lodge income tax returns on an annual basis, each financial year. The financial year is the period from 1 July to 30 June in the following year. The Commissioner can grant permission for a taxpayer to have a SAP ending on a date other than 30 June. The application has to be made by a particular entity. In your case the partnership has been granted a SAP. The income derived by the partnership shall be included in the partnership return on this basis. The individuals will include the partnership distribution in their individual income tax returns lodged on the normal financial year basis, along with the income that they derive as individuals in that year. You derive income from the investment in shares and a rental property. These assets are held in joint names, but are not partnership assets. The income from these sources will be disclosed in your individual returns on the basis of when the income is derived as individuals. The dividend and rental income are assessable at the time they are received. Therefore the income should be included in your income tax return in the financial year that it is received.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You are involved in a two person partnership, to conduct a primary production business. | The partnership was granted a SAP. The SAP is then on a calendar year basis. | The individuals were not granted a SAP; it only applies to the partnership business activity. | There are also investments in shares and land, held in joint names, which are separate from the partnership (they are not partnership assets). These investments derive dividend and rental income.