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Edited version of your private ruling
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Ruling
Subject: Interest income
Question:
Does the interest from a bank account form part of your assessable income?
Answer:
No.
This ruling applies for the following period
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commenced on
1 July 2007
Relevant facts and circumstances
You hold a bank account in trust for your parents
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Reasons for decision
Interest income is assessable under subsection 6-5(1) of the Income Tax Assessment Act 1997 as ordinary income.
Interest income from bank accounts is assessable to the person who derives the income and is beneficially entitled to the income. The person/s in whose name the investment is taken out will generally be considered to be beneficially entitled to the income from the bank account unless there is evidence to the contrary.
In special circumstances, interest income that is earned by a person through monies held in an account in their name may not be assessable for the tax on that income. This is the case in situations where the money is held in trust.
Taxation Ruling IT 2486 discusses the issue of money held in trust for another person. IT 2486 states that regardless of the name and type of the account, the essential question that must be asked is: 'Whose money is it? The circumstances in each case must be considered when determining whose money it is.
The types of evidence that may show that the ownership of the moneys in an account is someone other than the account holder/s are:
· information showing who contributed funds to the account,
· in what proportions the contributions were made,
· who drew on the account, and
· who used the money and accrued the interest as their own property.
After reviewing your specific circumstances, it is considered that the funds belong to your parents and were merely held in trust by you. As such, the interest earned on the bank accounts is assessable to your parents.
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