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  • Investment income

    Work out which investment income you must declare, such as interest, dividends, rental income or other capital gains.

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    When to declare investment income

    You must declare income you earn from investments and assets in your tax return.

    Investment income may include amounts from interest, dividends, rental income, managed investment trust credits, crypto assets and other capital gains.

    You need to declare investment income whether you receive payments directly or through a distribution for a partnership (such as a share club) or trust.

    Income from jointly held assets

    If you hold assets jointly with another person it is assumed that income of the asset is divided equally. That is unless you can show that you hold the asset in unequal proportions.

    Interest income

    If you're an Australian resident and you receive interest, you must declare it as income. Interest income includes:

    • interest you earn from financial institution accounts and term deposits
    • interest you earn from any other source including penalty interest you receive on an investment
    • interest you earn from children's savings accounts, if you
      • open or operate an account for a child and the funds in the account belong to you
      • spent or use the funds in the account
    • interest we pay or credit to you – for example, interest on early payments, interest on overpayments and delayed refunds
    • life insurance bonuses (you may be entitled to a tax offset equal to 30% of any bonus amounts you include in your income)
    • interest from foreign sources
      You can claim a foreign income tax offset for any tax paid on this income.

    Term deposits

    You must declare interest income in the year it is credited or received. For term deposits this usually means you should declare interest in the year the investment matures.

    If you elect to rollover your investment, you will need to declare the interest earned as at the rollover date. This is the amount you would receive if you had not elected to rollover the investment.

    Similarly, you may choose to have the interest from a term deposit held for more than 12 months, and credited to a different account periodically throughout the life of the investment. In this case, the interest is assessable at the dates of payment (which is before the date of maturity). You are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct.

    For more information on income according to ordinary concepts see, subsection 6-5(4) of ITAA 1997.

    Dividends

    Dividend payments can be money or other property, including shares. If you receive bonus shares instead of money, the company issuing the shares should give you a statement that shows if the bonus shares are a dividend.

    Dividend income may come from a:

    • listed investment company
    • public trading trust
    • corporate unit trust
    • corporate limited partnership (in the form of a distribution).

    Some dividends have imputation or franking credits attached.

    If you receive franking credits on your dividends, you must declare in your tax return both your:

    • franked amount
    • franking credit.

    If a company pays or credits you with dividends that have been franked, you'll generally claim a franking tax offset.

    Rental property income

    You must declare the full amount of any rent and rent-related payments that you receive, in your tax return. This also includes amounts you receive from overseas properties.

    If you receive goods and services instead of rent, you must work out and declare the monetary value.

    Payments that relate to your rental property include:

    • rental bond, money you retain or keep – for example, because
      • a tenant defaults on the rent
      • of damage to your rental property requiring repairs
    • an insurance payout to compensate you for lost rent
    • a letting or booking fee
    • a reimbursement or recoupment for deductible expenditure, such as an amount from a tenant to cover the cost of repairing damage to your rental property. Include the whole amount you receive from the tenant in your income and you can claim a deduction for the cost of the repairs.
    • rent you receive through the sharing economy (renting out a room or a whole house or unit on a short-term basis, through a website or app).

    Co-ownership

    Only include your share of rental income and expenses in your tax return, if you:

    • own a rental property jointly or in common with another person
    • have an interest in a partnership that carries on a rental property business.

    Managed investment trusts

    You must show any income or credits you receive from any trust investment product in your tax return. This includes income or credits from a:

    • cash management trust
    • money market trust
    • mortgage trust
    • unit trust
    • managed fund – such as a property trust, share trust, equity trust, growth trust, imputation trust or balanced trust.

    Capital gains

    You must declare the amount of any capital gain or capital loss you make when you dispose of a capital asset, such as an investment property, shares or crypto assets. Generally, your capital gain or capital loss is the difference between:

    • your asset's cost base (what you paid for it)
    • your capital proceeds (the amount you receive for it).

    You can also make a capital gain if a managed fund or other unit trust distributes a capital gain to you.

    You report both capital gains and capital losses in your income tax return and may pay tax on your capital gains. Capital gains tax is part of your income tax, not a separate tax.

    Crypto asset income

    You must declare rewards you receive for staking crypto assets as other income in your tax return.

    A reward will usually be in the form of additional tokens from holding the original tokens. You will need to work out the money value of the additional tokens at the time you receive them.

    Some crypto projects 'airdrop' new tokens to existing token holders as a way of increasing the supply of tokens. The money value of an established token you receive by airdrop is income at the time you receive them.

    Declare these amounts as other income in your tax return.

    A CGT event happens when you dispose of your crypto asset. You may make either a capital gain or capital loss on the disposal of the crypto asset which you need to declare in your tax return. If you make a capital gain, you may pay tax on it.

    Last modified: 17 Aug 2022QC 31937