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Edited version of private advice
Authorisation Number: 1051947940160
Date of advice: 10 February 2022
Ruling
Subject: Assessable income
Question
Can the income generated from the investments in the Share Trading Account be assessable to Taxpayer 1 and Taxpayer 2 in proportion to their beneficial ownership of the account?
Answer
Yes. Having considered your circumstances and the relevant factors, we accept the beneficial owners of the Share Trading Account are different to the legal owner. The beneficial owners, Taxpayer 1 and Taxpayer 2, have held proportionate ownership interests in the investments in the Share Trading Account since XX/XX/XXXX when Taxpayer 2 was granted Authority to Trade on the Share Trading Account. Therefore, Taxpayer 1 and Taxpayer 2 can declare the income (such as interest, dividends and net capital gain/loss) from investments in the Share Trading account in their respective income tax returns in proportion to their beneficial ownership. Further information can be found in Taxation Determination TD 2017/11 Income tax: who should be assessed to interest on bank accounts?
This private ruling applies for the following periods:
Income year ended 30 June 20XX
Income year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
Taxpayer 1 and Taxpayer 2 have been in a de facto relationship for many years and plan on getting married on XX/XX/XXXX.
On XX/XX/XXXX, Taxpayer 1 opened a Share Trading Account.
On XX/XX/XXXX, Taxpayer 2 was added as an Authority to Trade on the Share Trading Account and evidence was provided showing Taxpayer 1 and Taxpayer 2 both have authority to act on the Share Trading Account.
Taxpayer 1 and Taxpayer 2 make joint decisions about the Share Trading Account such as the investment strategy and execute that strategy jointly.
The resulting dividends received and/or any net capital gain/loss made on the investments in the Share Trading Account are automatically reinvested into the account.
The monthly salary of Taxpayer 1 of approximately $X is deposited directly into the Share Trading Account.
The salary of Taxpayer 2 of approximately $X per month, is deposited directly into a separate Transaction Account.
Funds from the Transaction Account pays for all Taxpayer 1 and Taxpayer 2 joint expenses. Any surplus funds in the Transaction Account are deposited into the Share Trading Account.
Taxpayer 1 also has authority over the Transaction Account.
Whilst there is no written agreement in place, Taxpayer 1 and Taxpayer 2 consider the Share Trading Account and the investments in the account as assets of the relationship that are equally owned and utilised to the benefit of both.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 subsection 6-5(2)
Income Tax Assessment Act 1997 subsection 6-5(4)