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Edited version of your written advice
Authorisation Number: 1012852947763
Date of advice: 3 August 2015
Ruling
Subject: Interest on bank accounts
Question
Are you assessable on the interest income from bank accounts where you are listed as a joint account holder?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commences on
1 July 2013
Relevant facts and circumstances
The inheritance money was placed into a bank account held on behalf of each minor.
You were a signatory to each bank account. You became a signatory to ensure the funds were used solely for the benefit of the minors.
You have no interest in the funds and cannot access the money for your own purposes.
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.
Interest income is considered ordinary income and therefore is assessable under section 6-5 of the ITAA 1997.
Taxation Determination TD 92/106 which deals with who should be assessed to interest earned on a joint bank account states that interest income on a joint bank account is assessed to the persons who are beneficially entitled to the income. The entitlement depends on the beneficial ownership of the money in the account. The general presumption is that holders of accounts in joint names have joint beneficial ownership of the moneys in equal shares. This presumption is rebuttable by evidence to the contrary.
Evidence relevant in determining an individual's beneficial entitlement includes information as to who contributed to the account, in what proportions the contributions were made, who drew on the account, who used the money and who the interest is distributed to.
In your case, all the funds in the account are held on trust solely for the benefit of the minors and you have no entitlement to personally receive any money from these accounts. You are only a joint account holder in order to ensure the funds were used only for the benefit of the minors. In these circumstances, you have no beneficial entitlement to the money held in these accounts and therefore you are not liable to taxation on the interest income in respect to these accounts.