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Edited version of your written advice
Authorisation Number: 1013126360173
Date of advice: 18 November 2016
Ruling
Subject: Interest income
Question
Is any interest earned on a bank account held in joint names with your parent assessable to you?
Answer
No
This ruling applies for the following periods:
Year ended 30 June 20YY
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You are a resident of Australia for income tax purposes.
You had a bank account in Australia.
The bank account was in joint names with your parent.
You intended to set up the bank account solely in your parent's name and have the power of attorney to act on your parent's behalf.
The bank account was set up as a joint account in error.
You did not make contributions to the bank account.
You did not use any money from the bank account.
You only acted on your parent's behalf.
The bank account was closed in 20YY.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Reasons for decision
Interest income is assessable as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997).
Taxation determination TD 92/106 - Income tax: who should be assessed to interest earned on a joint bank account states that interest income on a joint bank account should be returned by the taxpayer who is beneficially entitled to the income. That entitlement depends on the beneficial ownership of the monies held in the account. The general presumption is that holders of accounts in joint names have joint beneficial ownership of the monies in equal shares, unless evidence is provided to the contrary.
In your case, you had a joint bank account with your parent. You intended to set up the bank account solely in your parent's name and have the power of attorney to act on your parent's behalf. The bank account was set up as a joint account in error. You did not make contributions to the bank account. You did not use any money from the bank account. You only acted on your parent's behalf.
You were not the beneficial owner of the joint bank account. Therefore, you are not required to declare 50% the interest derived from the bank account in your tax return.
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