Instructions to complete item 11 in the tax return for gross interest, including Australian Government loan interest.
Interest to include
Show at label 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 us.
The total, which is the gross amount of interest received or credited, must be included in assessable income.
If the only income you derived jointly (or in common) with another person was:
- rent from a jointly owned property
- interest from a jointly held account
- dividends from jointly held shares
and you were not in a partnership carrying on a business, do not show any interest income at this item. Show your share of the interest income at item 10 Gross interest on your Tax return for individuals 2023.
If the TOFA rules apply to the partnership, include all interest received or credited to it from financial arrangements subject to the TOFA rules at label J.
Show interest that is part of a cash management trust distribution or other similar trust investment product at item 8 Partnerships and trusts.
Copy details from all statements to Worksheet 3 and 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. For more information on non-share dividends and non-share equity interests, see Debt and equity tests: overview.
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 to the qualifying security rules in Division 16E of the ITAA 1936.
Those rules will only apply if the TOFA rules do not apply (see TOFA rules below). In addition, the security must be one that:
- was issued after 16 December 1984
- had a maturity date of 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 9: qualifying security rules
On 1 July, a zero-interest-discounted security is issued at $82.65, redeemable on 30 June after 2 years at a face value of $100. The investor holds the security until it matures. Where this security is not subject to the TOFA rules, the investor is required to calculate the effective rate of interest for each 6-month period; in this case, it is 4.88%.
The accrued amount included in gross interest is equal to the increase in value of the security in each income year, as follows:
Row |
Value of security |
Year 1 |
Year 2 |
|---|---|---|---|
A |
at beginning of year |
82.65 |
90.91 |
B |
at half year |
86.68 |
95.35 |
C |
increase: b minus a |
4.03 |
4.44 |
D |
at end of year |
90.91 |
100.00 |
E |
increase: d minus b |
4.23 |
4.65 |
F |
increase for year: |
8.26 |
9.09 |
End of example
In the example, the 6-monthly period falls at exactly half-year.
Taxation of financial arrangements (TOFA) rules
A discounted, deferred interest or capital-indexed security that is a qualifying security may instead be subject to the TOFA rules.
This will be the case if the partnership starts to have the security on or after the start of the partnership's first income year starting on or after 1 July 2010 (or 1 July 2009 if the partnership made an early start election under the TOFA rules), and:
- the partnership is affected by the TOFA rules (below), or
- the security is to end more than 12 months after the partnership starts to have it.
If what you show at label J includes an amount which is brought to account under the TOFA rules, also complete item 31 Taxation of financial arrangements (TOFA).
Example 9A: Taxation of financial arrangements
On 1 July 2021, a zero-interest-discounted security is issued at $82.65, redeemable on 30 June 2023 after 2 years at a face value of $100. The investor holds the security until it matures. As this security is subject to the TOFA rules and the TOFA accruals method applies to the security (investor has not made any tax-timing method elections under the TOFA rules) the investor is required to calculate the rate of return for each accrual interval. Using a 12-month period interval, the rate of return is 10.00%.
The gain amount included in gross interest is equal to the increase in value of the security in each income year, as follows:
Row |
Calculation element |
Year 0 |
Year 1 |
Year 2 |
|---|---|---|---|---|
A |
Amortised cost (year start) |
0 |
82.65 |
90.91 |
B |
Gain (increase in value of security) |
0 |
8.26 |
9.09 |
C |
Cash flows |
-82.65 |
0 |
100.00 |
D |
Amortised cost (year end): |
82.65 |
90.91 |
0 |
End of example
TFN amounts withheld from gross interest
Show at label 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.
We may check the amount shown at label J with our own records to determine accuracy. For more information, see Data-matching programs.
Continue to: 12. Dividends