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Edited version of private ruling
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Ruling
Subject: Target foreign income
Are the gifts of money from your parents-in-law considered as target foreign income for the purposes of IT4 in the 2009-10 income tax return?
No.
This ruling applies for the following period:
Year ended 30 June 2010
The scheme commences on:
1 July 2009
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You an Australian resident for income tax purposes.
You received a total of five irregular payments from your parents-in-law who are Country X's citizens and residents.
The money was a wedding present for you and your spouse. This was a one off set sum but was given to you in five instalments due to the Country X authorities' regulations regarding the number and amount of foreign currency exchanges that can be made over set time periods.
The money was not given to you for any services you have performed.
You have not included the amount in IT4 in your 2010 income tax return.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 159J(6).
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Under subsection 159J(6) of the Income Tax Assessment Act 1936 (ITAA 1936) adjusted taxable income has been defined to have the same meaning as in the A New Tax System (Family Assistance ) Act 1999.
Adjusted taxable income is defined in the A New Tax System (Family Assistance) Act 1999 below to mean:
(1) For the purposes of this Act and subject to subclause (2), an individual's adjusted taxable income for a particular income year is the sum of the following amounts:
(a) the individual's taxable income for that year;
(b) the individual's adjusted fringe benefits total for that year;
(c) the individual's target foreign income for that year;
(d) the individual's total net investment loss for that year;
(e) the individual's tax free pension or benefit for that year; and
(f) the individual's reportable superannuation contributions for that year.
Target foreign income is defined in A New Tax System (Family Assistance) Act 1999 as the amount of the individual's foreign income (as defined in section 10A of the Social Security Act 1991) for the income year. They include:
(a) An income amount earned, derived or received by the person from a source outside Australia for the person's own use or benefit; or
(b) A periodical payment by way of gift or allowance from outside Australia;
(c) A periodical benefit by way of gift or allowance from a source outside Australia
In your case, the money you received from your parents-in-law in Country X was a wedding present for you and your spouse. This was a one off set sum but was given to you in five instalments due to the Country X authorities' regulations regarding the number and amount of foreign currency exchanges that can be made over set time periods. Therefore, the payments are not considered as periodical payments under the above definitions.
Accordingly, the gifts of money from your parents-in-law are not considered as target foreign income for the purposes of IT4 in the 2010 income tax return.