Bank Interest - Tax treatment when adding husband/wife to same account

If husband has a bank account then midway through the financial year the wife gets added to the same account therefore the account changes to being a joint account, but the account number is exactly the same (not closed & opened a new one), how is the tax treatment of the interest on that account? Is it that all interest until midway through the financial year all goes to the husband then the next half of the year the interest is split between husband/wife? How will the ATO data matching be able to accurately see this?

 

The once is shared once they become joint owners.

 

Hi Terry,

Don't quite get what you mean. Do you mean that the whole financial year's interest will be split 50/50 between husband & wife?

 

No

Only after becoming joint owners

 

I think what Terry is trying to say is that it's generally the names on the title that tend to define who gets tax deductions, not the names on the accounts.

 

This is a savings account I assumed.

If single name on account till say 1 Oct then interest accrued until this point is 100% to that person as income. From then on interest accrued joint so 50/50 with other person

Don't forget that interest accrues daily but is credited monthly or 6 monthly etc so you may have to apportion accrued but not yet paid interest

 

Yes, savings account. Ok thanks for the explanation

 

Unusual for a bank to change an account to joint without an account number change.

Interest is earned when its credited not when its accrued for individuals. A reasonable apportionment may be required but generally 50% each is going to be the ATO accepted norm. If the bank changed the account to joint and didnt update for two TFNs then the ATO may not correctly datamatch and prefill the interest earned.

 

Ok thanks Paul. To be more specific it was a credit union, not actually a bank.