The starting point is frequently to transfer income-producing assets into joint names. The income is then automatically divided equally between husband and wife, even if the asset is actually held in different proportions. For example, the husband may decide to give his wife a 10% interest in a property. The rental income from this property would then be split 50:50 for tax purposes, although they could elect for it to be split 90:10 if they wanted to.

Equal proportions

The rules are slightly amended for certain assets. For example, the Revenue’s view is that a joint bank or building society account can be held in equal proportions if each spouse has equal access to the money in the account. No election can therefore be made to attribute the income in any other way.
As announced in the Budget 2004, the rules for shares in close companies are changed, with effect from 6 April 2004. Close companies are, in very simple terms, those owned by 5 or fewer shareholders. Most family companies are therefore likely to be close companies and so possibly caught by the new rules.

New Measures

Under the new measure, dividends arising on jointly owned shares in a close company will be taxed on husband and wife according to their actual ownership rather than in equal shares.