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Edited version of your written advice
Authorisation Number: 1012853105123
Date of advice: 3 August 2015
Ruling
Subject: Assessability of dividends from jointly owned shares
Question
Are you fully assessable on dividends received from shares held jointly by your child and yourself?
Answer
Yes.
This ruling applies for the following periods
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
The scheme commences on
1 July 2014
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
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.
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