Private ruling: Assessability of dividends from jointly owned shares
Date of advice: 3 August 2015
Published: August 2015
Ruling period: Year ended 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you fully assessable on dividends received from shares held jointly by your child and yourself? | A1: Yes.

Relevant facts and circumstances: You and your spouse jointly owned shares. Some shares were transferred into the joint names of your child and yourself. Your child is a minor. You hold the voting rights for the shares and will utilise the dividend income.

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

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) specifies that residents of Australia are assessable on income derived from all sources in and out of Australia. Taxation Determination TD 92/106 provides the Commissioner's view on who should be assessed to interest earned on a joint bank account. Although TD 92/106 specifically considers bank accounts, the principles are equally applicable to dividend income which is received from shares held jointly with a minor. TD 92/106 states that interest income on a joint bank account is assessed to the persons who are beneficially entitled to the income. The entitlement depends on the beneficial ownership of the money in the account. The general presumption is that holders of accounts in joint names have joint beneficial ownership of the moneys in equal shares. This presumption is rebuttable by evidence to the contrary. Evidence relevant in determining an individual's beneficial entitlement includes information as to who contributed to the account, in what proportions the contributions were made, who drew on the account who used the money and who the interest is distributed to. In the case of dividend income, who controls decisions regarding the shares in a relevant factor. In your case, shares are jointly held in the name of your child and yourself. You make all decisions regarding the shares, hold the voting rights and utilise the dividend income for your own purposes. Based on this information, it is considered that you have full beneficial ownership of the shares. Therefore the full amount of any dividends received from these shares form part of your assessable income. No portion of the dividends is required to be included in your child's assessable income.