Edited version of private ruling

Authorisation Number: 1011734502129

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Ruling

Subject: Assessable income

Question

Are the donations and gifts received classed as assessable income?

Answer: No.

This ruling applies for the following period

Year ending 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

Your child has an illness.

Your child attends therapy for the illness.

An event was organised by your family to assist in covering the out of pocket expenses for therapy.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Reasons for decision

Summary

In your situation, you conducted a once-off event where all proceeds will go towards therapy for your child.

It is accepted that the payment was not for any other use than to help offset your child's therapy expenses. It is also accepted that the donors were motivated by a desire to assist your child to obtain the therapy treatment. Therefore, the income from the event will not form part of your assessable income.

Detailed reasoning

Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

Taxation Ruling TR 2005/13 provides principles relevant to the determination of whether a transfer of money or property constitutes a gift.

The term 'gift' is not defined in the ITAA 1997. Therefore, the word 'gift' takes its ordinary meaning.

Rather than attempting to define a 'gift', the courts have described a gift as having the following characteristics and features:

· There is a transfer of the beneficial interest in property

· The transfer is made voluntarily

· The transfer arises by way of benefaction, and

· No material benefit or advantage is received by the giver by way of return.

Taxation Ruling IT 2674 examines whether gifts or voluntary payments received by church workers are assessable income. These principles are no different from those which apply in determining whether gifts received by taxpayers in other callings or occupations are assessable income.

Whether a gift is assessable income depends on the character of the gift in the hands of the recipient. Consideration is necessary of the whole of the circumstances in which the gift is received. For example, the following factors need to be taken into account:

· How, in what capacity, and ~ for what reason the recipient received the gift; and

· Whether the gift is of a kind ~ which is a common incident of the recipient's calling or occupation; and

· Whether the gift is made ~ voluntarily; and

· Whether the gift is ~ solicited; and

· If the gift can be traced to ~ gratitude engendered by some service rendered by the recipient to the donor, whether the recipient had already been remunerated fully for that service; and

· The motive of the donor (but ~ it is seldom, if ever, decisive); and

· Whether the recipient relies ~ on the gift for regular maintenance of himself or herself and any dependants.

A personal gift received by you for personal reasons, where there is no connection between the receipt of the gift and any income-producing activity by you, is not assessable income. Nor is a gift assessable income if it is referable exclusively to the attitude of the donor personally to you.

In your situation, you conducted a one-off event where all proceeds will go towards therapy for your child.

It is accepted that the payment was not for any other use than to help offset your child's therapy expenses. It is also accepted that the donors were motivated by a desire to assist your child to obtain the therapy treatment. Therefore, the income from the event will not form part of your assessable income.

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