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11 Gross interest

Last updated 11 February 2019

Show at J the interest from banks and credit unions, building societies, debentures, notes and deposits, income accrued on discounted or deferred interest securities, government securities, and interest paid by the Tax Office.

The total, which is the gross amount of interest received or credited, must be included in assessable income.

Even if the TOFA rules apply to the partnership, show at J all interest received or credited. This includes interest from financial arrangements subject to the TOFA rules.

Attention

If what you show at J includes an amount which is brought to account under the TOFA rules, also complete item 31Taxation of financial arrangements (TOFA).

End of attention
Further Information

For further information see Guide to the taxation of financial arrangements (TOFA) rules.

End of further information
Attention

Show interest that is part of a cash management trust distribution or other similar trust investment product at item 8 Partnerships and trusts.

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Copy details from all statements to worksheet 3. Keep the worksheet with your tax records.

Do not include non-share dividends received from holding a non-share equity interest. If the partnership 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. Further information on non-share dividends and non-share equity interests is in Debt and equity tests: guide to the debt and equity tests.

Discounted, deferred interest or capital-indexed securities

Show at J the appropriate amount of discount, interest or other gain which accrued this income year on a discounted, deferred interest or capital-indexed security.

Where the security is not subject to TOFA, the security is one:

  • that was issued after 16 December 1984
  • that had a maturity date more than 12 months from the issue date, and
  • if 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 9

On 1 July 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. Where this security is not subject to TOFA, the investor is required to calculate the effective rate of interest for each six-month period. In this case it is 4.88%.

The accrued amount included in the total income each income year is equal to the increase in value of the security in that year, as follows:

Table 5: Value of security

Value of security at:

Year 1
($)

Year 2
($)

 

Beginning of year

82.65

90.91

(a)

Half-year

86.68

95.35

(b)

Increase

4.03

4.44

(b) - (a) = (c)

End of year

90.91

100.00

(d)

Increase

4.23

4.65

(d) - (b) = (f)

Increase for year

8.26

9.09

(c) + (f)


In the example the six-monthly period falls at exactly half-year.

TFN amounts withheld from gross interest

Show at I any TFN amounts withheld from gross interest where a TFN has not been provided to the investment body.

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 tax return, keep them with the partnership's tax records.

Attention

We may check the amount shown at J with our own records to determine accuracy. See Information matching.

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