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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1012933561241

Date of advice: 6 January 2016

Ruling

Subject: Income - interest - ownership

Question

Does interest income earned from a bank account held in trust for your parent, form part of your assessable income?

Answer

No

This ruling applies for the following period(s)

Year ended 30 June 2014

Year ended 30 June 2015

The scheme commences on

1 July 20XX

Relevant facts and circumstances

You opened a bank account in which earned interest.

This account was held on behalf of your parent.

The funds were deposited from your parent's account so that you could purchase everyday items and pay bills on their behalf.

You have copies on bank statements showing the everyday use of this account was solely used for your parent's expenses.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 6-5(1)

Reasons for decision

Interest income is assessable under subsection 6-5(1) of the Income Tax Assessment Act 1997 as ordinary income.

The person who derives the income is the person who is assessable for any tax on that income.

In certain circumstances, interest income that is earned by a taxpayer through money 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. The circumstances in each case must be considered when determining whose money it is.

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:

In your case, you held a bank account as trustee for your mother. Funds were deposited from your parent's bank account so that you could purchase everyday items and pay bills on your parent's behalf. This account was used solely for your parent's expenses.

In accordance with IT 2486 it is accepted that the monies in the account do not belong to you. Therefore, the interest earned on the trust account is not assessable to you.

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