Changing from Single to Joint Stock Account

[#1]

Hi All,

I am trying to change my Individual stock account to include my partner's name (Joint stock account). How does the ATO treat ownership of my current shares and the taxation of future dividends/CGT of such shares (50/50% or 100% for myself)?

[#2 · Accepted solution]

Hi @german,

Great questions! When you add another person to your bank or share trading account, you're basically changing the ownership of the account. Owners of a joint account usually own 50% of the account and any interest or dividends they earn, unless you clearly document the percentage each person owns in your records.

Under the Income Tax Assessment Act 1997 (subsection 140-10(2)), you dispose of a capital gains tax (CGT) asset if a change of ownership occurs from you to another entity. This is the case even if you receive no capital proceeds from a CGT event - you are taken to have received the market value of that CGT asset as part of the transfer of ownership.

You'll need to include any capital gain or loss from the transfer of ownership on your income tax return and update your records for future CGT events. You'll need to work out the cost base of your shares, and then calculate your capital gain or loss based on the sale price of the market value of the shares on the day of transfer.

Our guide to capital gains tax helps to explain the CGT implications of the transfer and how to calculate your gain or loss to report on your return.

Hope that helps!

[#3]

If shares are owned by one individual but the dividends for those shares are paid to a joint bank account, will the tax liability fall on one person or two?

[#4]

Hi @Charlie129

The liability of the shares will always fall to the owner regardless of whether the funds are being deposited into a joint account or not. You would need to divest of them to change things and in doing so it may trigger a CGT event for you.