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Edited version of your written advice
Authorisation Number: 1012674845079
Ruling
Subject: Joint dividend income - relationship dispute
Question
Must you include in your taxable income dividend income received on jointly held shares but paid into your former partner's bank account, which you cannot access?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2014
The scheme commences on:
1 July 2013
Relevant facts and circumstances
You remain the joint holder of shares with your former partner. The relevant dividends are paid into their bank account, which you cannot access. This disadvantages you because you are not receiving the dividend proceeds plus the dividend amounts are used to calculate your child support payments.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 44
Income Tax Assessment Act 1997 Section 6-10
Income Tax Assessment Act 1997 Section 10-5
Income Tax Assessment Act 1997 Section 207-20
Reasons for decision
Subsection 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provides your assessable income includes amounts that are statutory income listed under section 10-5, which includes dividends in general under subsection 44(1) and credits on franked dividends under subsection 207-20.
Subsection 44(1) of the Income Tax Assessment Act 1936 provides the assessable income of a shareholder in a company includes dividends (other than non-share dividends) that are paid to the shareholder by the company out of profits derived by it from any source.
Section 207-20 of the ITAA 1997 provides if an entity makes a franked distribution to another entity, the assessable income of the receiving entity, for the income year in which the distribution is made, includes the amount of the franking credit on the distribution.
In your case, because you are a shareholder in the relevant companies, the relevant portion of the dividends and franking credits that are paid on your behalf will be included in your assessable income, regardless of whether or not you can access the funds.