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Edited version of private advice
Authorisation Number: 1051844303094
Date of advice: 27 May 2021
Ruling
Subject: Assessable income - gifts
Question
Does the money gifted to you by your family form part of your assessable income?
Answer
No
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
Your family gifted you money to assist you.
There is no employment relationship between you and your family.
There is no loan agreement between you and your family.
The payment is not in relation to any services provided.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2)
Reasons for decision
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 Income tax: tax deductible gifts - what is a gift provides principles relevant to the determination of whether the receipt of money constitutes a gift.
TR 2005/13 highlights that 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.
Whether a gift is assessable income depends on the character of the gift in the hands of the recipient.
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.
In your situation, you received money from your family to assist you. The payment was made to you voluntarily and not as a result of any services that you performed.
Accordingly, the money that you received is not assessable income and does not need to be included in your income tax return.
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