When should you declare investment income?
You are liable to declare income you receive from investments and assets in your tax return. Investment income may include amounts from dividends, interest, managed investment trust, rental income, capital gains, and crypto assets. You must declare investment income when you obtain payments directly or through a distribution for a trust or partnership.
Income from jointly held assets
If you hold assets jointly with another person, it is believed that income from the asset is equally divided. This is unless you can show that you hold the asset in unequal proportions. For instance, if you own a property as tenants in common with another person, and you own 70% and they own 30%, you are required to declare 70% of the income from the property and ther other must declare the other 30% of the income. To understand what to report in tax return, you can seek help from Melbourne accountants.
What is interest income?
Australian resident receiving interest is requirted to declare it as income. Interest income includes:
- Interest you receive from financial institution accounts and term deposits
- Interest you receive from any other source including penalty interest you receive on an investment
- Interest from children’s saving accounts, if you
- Open or run an account for a child and the funds in the account belong to you
- Use or spent the funds in the account
- Interest the ATO pays or credits to you
- Life insurance bonuses
- Interest from foreign sources.
Interest incurred prior to 1 July 2025 must be declared. You declare these amounts as other income in your tax return. Interest incurred on or prior to 1 July 2025 can’t be claimed as a deduction so you don’t need to declare it as income if it is remitted or recouped.
Do you get taxed on term deposits?
You are required to declare interest income in the year it is received, credited, or applied or dealt with in any way on your behalf or as you direct. This means you must declare interest in the year the investment matures. In case you are elected to rollover your investment or if the financial institution automatically reinvests the term deposit at maturity, you must declare the interest earned as at the rollover or reinvestment date.
Similarly, you may choose to have the interest from a term deposit, held for over 12 months, credited to a different account periodically throughout the life of the investment. This means that the interest is assessable at the dates of payment.
Dividends
Dividend payments can be other property or money, including shares. If you earn bonus shares instead of money, the company issuing the shares must provide you with a statement showing whether the bonus shares are a dividend. Dividend income may be derived from a:
- Listed investment company
- Public trading trust
- Corporate unit trust
- Corporate limited partnership.
Rental property income
You need to declare the full amount of any rent and payments related to rent that you receive. If you receive goods and services in place of rent, you need to declare the monetary value. Here are the payments related to your rental property:
- Rent
- Declare the gross amount of rent paid by the tenant.
- Declare rent in the income year paid by the tenant.
- Rental bond, money you keep or retain – for instance, because
- A tenant defaults on the rent
- Of damage to your rental property, which may need repair
- An insurance payout to compensate you for lost rent.
- A letting or booking fee.
- A reimbursement or recoupment for deductible expenditure. Report the whole amount you receive from the tenant in your income, and you can claim a deduction for the repair cost.
- Rent received through the sharing economy.
Managed investment trusts
You need to show any income you receive or credits you are liable for from any managed investment trust on your tax return. To ensure reporting on your tax return, you can seek help from a tax return accountant.
Crypto asset income
Report the rewards received from staking crypto assets. These are usually in the form of additional tokens from holding the original tokens. Work out the money value of the extra tokens and convert the amounts into Australian dollars when you receive them.
Capital gains
You need to declare any capital gains you make when you dispose of or sell capital assets, such as an investment property, crypto assets, or shares.
Conclusion
The blog shares what income to report from your investments. For more information, you can get in touch with Reliable Melbourne accountants.