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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your private ruling

Authorisation Number: 1012610887248

Ruling

Subject: Gifts to family members

Question

Will you be liable for tax on money you gifted to your adult children?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2014

The scheme commences on

1 July 2013

Relevant facts and circumstances

You are a self-funded retiree.

You gifted money to each of your adult children.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Assessability of gifts

A voluntary payment or gift which is properly characterised in the hands of the recipient as a product or incident of employment or a reward for services (including past services) is assessable income, even if paid by a third party. However, a voluntary payment or gift that is not related in any way to personal exertion will not be assessable.

The term 'gift' is not defined in the Income Tax Assessment Act 1997. The courts have described gifts as having the following characteristics:

Paragraph 32 of IT 2674 provides that, based on established case law: 

Therefore, where a gift is made for personal reasons and not as a result of any income-producing activity or provision of services, and is given voluntarily, the gift will not be assessable income. There are no tax implications for the recipient when a gift is made in these circumstances.

Deductibility of gifts

Gifts or donations of $2 or more to an eligible organisation are tax deductible. An eligible organisation is an organisation that is named in the tax legislation, or has been endorsed by the Tax Office as a deductible gift recipient, such as:

The gifting of money to a family member for personal reasons is private in nature and is not tax deductible.

As such, there are no tax implications for you as a result of you gifting money to your adult children. No amount is included in your assessable income, and you are not entitled to any deductions.


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