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Edited version of your private ruling
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Ruling
Subject: Interest income
Question
Are you assessable on interest derived from funds from an insurance payout which were held in a bank account?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
The scheme commenced on
1 July 200X
Relevant facts
Your experience a house fire and you received an insurance payment which was less than the property and personal effects were worth.
You placed the payment into a bank account and received interest on the account.
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.
While we acknowledge that the funds that produced the interest income was from an insurance payout on personal items, the interest itself is derived from placing those funds into the bank account.
Income derived from a bank account is considered ordinary income and therefore is assessable under section 6-5 of the ITAA 1997.