Item 11 - Gross interest received
Use the Interest Income Worksheet (int) to record details of the financial institutions paying the interest. Interest earned may be entered in dollars and cents. The application will round the total on integration to the main return label. If the interest income is earned on a joint account, functionality is contained in the Interest income worksheet (int) to permit the sharing of income on that account. Refer to Interest Income worksheet (int) - entities.
Include all amounts of interest received from:
banks, building societies, credit unions
government securities, debentures, notes and deposits
income accrued from discounted or deferred interest securities
Australian government loans issued before 1 November 1968
Interest paid by the ATO
This is the total amount of gross interest received by the partnership from Australian sources, such as listed above or any other source in Australia.
If deductions relating to investment income are present at item 16, then interest or dividend income must be present at either item 11 or item 12.
Show interest that is part of a cash management trust distribution or other similar trust investment product at item 8 Partnerships and trusts.
Even if the TOFA rules apply to the trust, show at label J all interest received or credited. This includes interest from financial arrangements subject to the TOFA rules.
Refer to Guide to the taxation of financial arrangements (TOFA) rules on the ATO website.
Do not include non-share dividends received from holding a non-share equity interest. If the trust holds such an interest, the issuer is obliged to forward a dividend statement with details of the dividends, which should be shown at item 12 Dividends.
For more information on non-share dividends and non-share equity interests see Debt and equity tests: guide to the debt and equity tests on the ATO website.
Discounted, deferred interest or capital-indexed securities
Show at label J the appropriate amount of discount, interest or other gain which accrued this income year on a discounted, deferred interest or capital-indexed security.
Qualifying security rules
A discounted, deferred interest or capital-indexed security may be subject the qualifying security rules in Division 16E of the ITAA 1936.
Those rules will only apply if the TOFA rules do not apply (see below). In addition, the security must be one that:
was issued after 16 December 1984
had a maturity date more than 12 months from the issue date and,
the sum of all payments under the security (except periodic interest - for example, a coupon rate) exceeds its issue price by greater than 1.5%
Example:
On 1 July of the income year, a zero-interest-discounted security is issued at $82.65, redeemable on 30 June after two years at a face value of $100. The investor holds the security until it matures. The investor is required to calculate the effective rate of interest for each six-month period. In this case, it is 4.88%.
Value of security at |
| Year 1 | Year 2 |
|---|---|---|---|
Beginning of the year | (a) | 82.65 | 90.91 |
Half-year | (b) | 86.68 | 95.35 |
Increase | (b)-(a)=(c) | 4.03 | 4.44 |
End of year | (d) | 90.91 | 100.00 |
Increase | (d)-(b)=(f) | 4.23 | 4.65 |
Increase for year | (c)+(f) | 8.26 | 9.09 |
This is the total amount of tax paid as the TFN withholding tax where the trust failed to quote a tax file number. If an amount of TFN deductions is present, an amount of gross interest must also be present.
1. TFN deductions must be less than 50% of the total interest.
2. Do not include interest from a foreign source here. It should be entered at item 23 - Other assessable foreign source income.
Record keeping
Keep all documents issued by the investment body that detail payments of income and any TFN amounts withheld from those payments.
Do not attach these documents to the partnership or trust tax return - keep them with the trust's tax records.
CCH References
10-470 Interest
23-020 Taxation of financial arrangements (TOFA)