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Edited version of your private ruling
Authorisation Number: 1012498825502
Ruling
Subject: Assessability of interest income derived by a trust
Question
Is the interest income derived by a trust included in your assessable income?
Answer
No.
This ruling applies for the following period
1 July 2011 to 30 June 2015
The scheme commences on
1 July 2011
Relevant facts and circumstances
You are the trustee of a trust.
The trust earned interest income.
Money belonging to the trust was invested; however, your personal tax file number was assigned to the investment rather than the trust tax file numbers.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Reasons for decision
Summary
The interest income is not derived by you; rather it is derived by the trusts, and as such it is not included in your assessable income.
Detailed reasoning
Your assessable income includes income according to ordinary concepts, which is called ordinary income (section 6-5 of the Income Tax Assessment Act 1997 ITAA 1997)).
Interest income is ordinary income.
Regardless of the name on a bank account, or the tax file number assigned or attached to a bank account, interest income is assessable to whoever is beneficially entitled to the income. That entitlement depends on the beneficial ownership of the moneys in the account.
Where moneys are merely held in trust, the trustee is not personally assessable on amounts held for another person. The same principle applies to amounts held in the name (or tax file number) of a trustee of a trust.
In your case, money belonging to the trust has been invested and your personal tax file number has been assigned to the investments. As the trusts are the beneficial owners of the money in these accounts, it is the trusts that are beneficially entitled to the interest income derived from the invested money.
The interest income is not derived by you; rather, it is derived by the trusts, and as such the interest income is not included in your assessable income under section 6-5 of the ITAA 1997.