Edited version of private advice

Authorisation Number: 1052320305335

Date of advice: 25 October 2024

Ruling

Subject:Assessable Income

Question

Can the income generated from a Bonus Saver bank account be assessable to both you and your spouse in proportion to their beneficial ownership of the account?

Answer

Yes.

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that your assessable income includes income according to ordinary concepts, which is called ordinary income. Dividends paid by a company to a shareholder constitutes ordinary income. Subsection 6-5(2) of the ITAA 1997 provides that if you are an Australian resident, your assessable income includes the ordinary income you derived directly or indirectly from all sources, whether in or out of Australia during the year.

Section 6-10 of the ITAA 1997 provides that your assessable income also includes statutory income, an amount included in assessable income by a statutory provision. Any capital gain realised upon the disposal of shares constitutes statutory income. Subsection 6-10(4) of the ITAA 1997 provides that if you are an Australian resident, your assessable income includes your statutory income from all sources, whether in or out of Australia.

You must declare income you earn from investments in your tax return. If you hold assets jointly with another person, it is assumed that income of the asset is divided equally. That is unless you hold the asset in unequal proportions.

Beneficial ownership

The concept of beneficial ownership is explained in Taxation Determination TD 2017/11-Income tax: who should be assessed to interest on bank accounts? A beneficial owner is the person or entity who is beneficially entitled to the income and proceeds from an asset. Beneficial ownership can be different to legal ownership.

There is a general presumption that the holders of a joint bank account have joint beneficial ownership of the moneys in equal shares. That presumption is rebuttable by evidence to the contrary.TD 2017/11 states that evidence that is relevant to determine who has beneficial ownership of money in a joint account, or in what proportion the interest should be apportioned, includes evidence related to:

•                     who contributed to the account;

•                     in what proportion contributions were made;

•                     the nature of contributions to the account;

•                     who made withdrawals from the account;

•                     who used the money and any accrued interest in the account as their own property, and

•                     whether money is being held on trust for other persons.

In your case, the Bonus Saving bank account was opened in your name only in the 20YY income year. This indicates you were the sole owner of the account.

However, we consider evidence in support of your spouse's beneficial ownership. The amounts contributed to the Bonus Saver bank account at opening and soon after opening were from both you and your spouse.

Due to the presumption that holders of a joint bank account have joint beneficial ownership of the moneys in equal shares, this means that we presume that you and your spouse contributed roughly equally to the bank account in a ratio of 50:50.

Both you and your spouse were to both benefit regarding the proceeds from the account.

The principle and income generated from the Bonus Saver bank account was reserved for the purpose of purchasing property in joint names.

Prior to the eventual purchase of the property, the balance was transferred to a bank account held in joint names.

Therefore, based on the evidence that was provided, the Commissioner is satisfied you and your spouse both beneficially owned the money in the bank account during the relevant period. Both parties can declare the income generated from the bank account in the 20YY income year in their respective income tax returns in proportion to their beneficial ownership.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

X XX XX

Relevant facts and circumstances

You held an Investment Bank account in your name only. The account was opened X X XX.

Bank statements have been provided showing money was transferred from Person A's bank account to your Investment Bank account on XX X 20XX.

Your Investment Bank account immediately before the transfer, had a balance of $XXX,XXX.

The purpose of the funds was always, to jointly purchase real property.

The total interest received on the Investment Bank account for the 20XX tax year was $XX,XXX.

The interest income received was to be shared equally.

The funds held by you and your spouse were beneficially held for you and your spouse in the proportion to the contributions made by XX/XX/20XX, XX:XX.

On X X XX the funds were transferred to a new account held in both the names of you and your spouse.

Purchase of property

You and your spouse were in the process of purchasing land jointly.

The settlement of the intended property occurred on or around X XX XX.

The Settlement statement shows, a purchase of property in joint names - you and your spouse for a sum of $XXX,XXX.

The title of the property has now been purchased in both names, you and your spouse.

The 20XX income tax returns of you or your spouse have not yet been lodged awaiting the outcome of the private ruling.

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 section 6-10

Income Tax Assessment Act 1997 subsection 6-10(4)