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Edited version of private advice
Authorisation Number: 1051585750162
Date of advice: 24 September 2019
Ruling
Subject: Interest income
Question
Are you required to declare the interest derived on term deposits in Country Y in your Australian tax return?
Answer
Yes.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You are a resident of Australia for taxation purposes.
You have a number of term deposits in Country Y.
The term deposits are in your name.
You deposit the money into the accounts.
The money in the accounts can be used by your family members for emergencies.
The term deposits accrue interest.
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) provides that where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia.However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.
Interest income is assessable as ordinary income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997).
Taxation Determination TD 92/106 states that interest income on a joint bank account should be returned by the taxpayer who is beneficially entitled to the income. That entitlement depends on the beneficial ownership of the monies held in the account. The general presumption is that holders of accounts in joint names have joint beneficial ownership of the monies in equal shares, unless evidence is provided to the contrary.
In your case you have a number of term deposit accounts in Country Y.
These accounts are in your name.
You have put money into these accounts.
TD 92/106 looks at joint accounts and who is required to declare the interest income the principals are the same for single account holders.
Where you are the legal and beneficial owner of the account you are required to declare the interest on that account.
It also does not matter where the accounts are held; you as a resident of Australia for taxation purposes are required to declare the interest on the accounts held in Country Y in your Australian tax return.