Private ruling: excepted income
Published: November 2012
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2011

Ruling: Q1: Is the interest income you receive excepted assessable income? | A1: Yes.

Relevant facts and circumstances: You are a minor. You are a prescribed person. You received a cash inheritance from the estate of a relative which was invested in a bank account in your name. You receive interest income from this account. You do not make any withdrawals from the account and the funds are not accessed by any other person.

Relevant legislative provisions: Income Tax Assessment Act 1936 Division 6AA, | Income Tax Assessment Act 1936 Section 102AC and | Income Tax Assessment Act 1936 Section 102AE.

Reasons for decision: Summary: Division 6AA of Part III of the Income Tax Assessment Act 1936 (ITAA 1936) imposes special rates of tax on prescribed persons in respect of eligible taxable income. A prescribed person is a person who is less than 18 years of age on the last day of the income year and who is not in full-time occupation or within certain other specified categories (subsections 102AC(1) and 102AC(2) of the ITAA 1936). The special rates of tax do not apply to excepted assessable income derived by a prescribed person. Subsection 102AE(2) of the ITAA 1936 includes in excepted assessable income, income derived by the minor from investment of any property that devolved upon the minor from the estate of a deceased person. You have advised that the interest income you receive is from the investment of a legacy received from a deceased estate. Therefore, it is excepted assessable income under subsection 102AE(2) of the ITAA 1936. The special rates of tax of Division 6AA of the ITAA 1936 do not apply to this income. Applying the principles of Taxation Ruling IT 2486, you are the beneficial owner of the funds, and the interest income from the bank account is assessable income for you.

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