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Edited version of your written advice
Authorisation Number: 1051194526961
Date of advice: 23 February 2017
Ruling
Subject: Assessabiility of interest
Question:
Are you assessable on all of the interest earned on a bank account held in joint names?
Answer:
Yes
This ruling applies for the following period
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commenced on
1 July 2011
Relevant facts
You and your child hold a joint bank account. Your child has an enduring power of attorney for you. The moneys in the account are solely for your benefit, and your child is a joint account holder to enable them to manage your bank account on your behalf.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Reasons for decision
Section 6-5 of the Income Tax Assessment Act 1997 provides that the assessable income of an Australian resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. Ordinary income has generally been held to include interest income.
Taxation Determination TD 92/106 states that interest income on a joint bank account should be assessed to the persons who are beneficially entitled to the income (MacFarlane v. FC of T 13 FCR 356; 86 ATC 4477; (1986) 17 ATR 808). That entitlement depends on the beneficial ownership of the money in the account.
Evidence relevant in determining the beneficial entitlement includes information as to who contributed to the accounts, in what proportions the contributions were made, the nature of the contributions, who drew on the account, and who used the money and the accrued interest as their own property.
In your case, the account is in your name and in the name of your child who has power of attorney over your affairs. The money deposited in the account belongs to you, and the interest income earned on the account is your income.
Your child who has power of attorney has no beneficial entitlement to the money in this account and has no entitlement to any interest income.
As you hold the beneficial entitlement to the interest, you are assessable on the interest income derived from this account.