When an account or an asset is held by more than one person, the interest or the capital gain is split between the owners, and each one declares their share in their own tax return and is taxed at their own marginal rate. How the split is worked out depends on what is held. For a joint bank account, the interest is divided equally by default, but it can be split according to who actually owns the money if you keep records. For a jointly owned asset like a property or shares, the capital gain is divided strictly by each owner’s legal ownership interest, and that cannot be changed by a private agreement. This difference, between what you can and cannot choose, is the thing most people get wrong.
How interest on a joint account is split
Interest on a joint bank account is split equally between the account holders by default. For a couple with a shared account, that is half each, and each person declares their share, not the whole amount. When you lodge through myTax it divides the interest evenly for you. There is some flexibility: if the money is genuinely owned in unequal shares, for example one partner put in all the funds, you can split the interest to match who really owns it, as long as you keep a record of how you worked it out. Whose name appears first makes no difference.
How a capital gain on a jointly owned asset is split
A jointly owned asset, such as an investment property or a parcel of shares, works differently. When it is sold, the capital gain or loss is divided according to each owner’s legal interest in the asset, and each owner reports their share in their own return. Two equal owners split the gain 50/50; owners with unequal shares split it by those percentages. Each owner then applies their own 50% CGT discount if the asset was held for more than 12 months, and each is taxed at their own marginal rate. The key point is that this split follows the legal title, not a side agreement.
The key difference, at a glance
| Joint bank account (interest) | Jointly owned asset like property (capital gain) | |
| Default split | Equal between holders | By legal ownership interest |
| Can you split it differently? | Yes, by who actually owns the money, with records | No, it follows legal title regardless of any agreement |
| Each owner declares | Their share of the interest | Their share of the gain |
| Taxed at | Each owner’s marginal rate | Each owner’s marginal rate, with the 50% discount per owner |
The table captures the distinction that trips people up. With a bank account, the ATO cares about who really owns the money, so you can split the interest to match, with evidence. With a property or other asset, the ATO follows the legal ownership on the title, regardless of who paid for what or any agreement between the owners. You cannot decide to put more of a property’s gain in the lower earner’s return just because it suits you.
Joint tenants versus tenants in common
How an asset is legally owned sets the split. Joint tenants each hold an equal interest, so the income and any capital gain are divided equally. Tenants in common can hold unequal interests, for example 20% and 80%, and the income and gain are split in those proportions. This is decided when you buy and is recorded on the title, so it is worth getting right at purchase, because it governs the tax for the whole time you own the asset and when you sell it. If you are not sure how you hold a property, your title documents will say.
Does this apply to shares and other assets too?
Yes. The same ownership principles apply to any jointly held asset, not just property. Jointly owned shares, managed funds, or crypto are split by legal ownership when they pay income and when they are sold, with each owner declaring their share and applying their own discount. Jointly held cash and term deposits follow the bank-account rule, split by ownership of the funds. So the two rules, actual ownership for money in an account and legal title for assets, cover most situations a couple or co-investors will meet.
A worked example
Say a couple own an investment property as joint tenants and sell it for a $300,000 gain. Because they are joint tenants, the gain is split equally, so each declares $150,000. Each then applies the 50% CGT discount, having held the property for more than 12 months, bringing each person’s taxable gain to $75,000, which is added to their own income and taxed at their own rate. If one earns far less than the other, their half is taxed more lightly, but they still only get their half. The higher earner cannot shift more of the gain across, because the 50/50 split is fixed by the joint tenancy.
Why whose name is on it matters so much
Because the split follows legal ownership, the decision that really matters is made when you buy, not at tax time. Putting an asset in the name of a lower-income owner, or choosing tenants in common with a particular split, can reduce the tax on the income and the eventual gain, but only if it is set up that way from the start and reflects genuine ownership. You cannot reallocate a property’s gain after the fact. This is exactly the kind of thing worth planning before you buy a jointly owned investment, and our business and tax advisers can model how different ownership structures would play out.
What about capital losses?
Losses split the same way. If a jointly owned asset is sold at a loss, each owner’s share of the capital loss goes to their own return, where it can offset their own capital gains, now or carried forward to future years. One owner cannot use the other’s share of the loss. The same applies to a rental property making a loss each year: it is divided by legal ownership, so a negatively geared property held 50/50 gives each owner half the loss, regardless of who actually pays the bills.
The records you need
For a joint account, keep a record of how you worked out any unequal split. For a jointly owned asset, keep the ownership details and each owner’s share of the cost base, the purchase price and costs, improvements, and the sale details, because each owner works out their own gain from their share. Good records make the split clean and defensible. Our tax planning checklist covers what to keep.
