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Edited version of private ruling
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Ruling
Subject: Gift from family member
Question
Are you assessable on money gifted to you by a family member?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
Your parent is selling their residential home and will give you an amount from the proceeds of the sale.
The amount will be made as a once off gift payment in order to help you repay private debts.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 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.
Ordinary income is income according to ordinary concepts. Ordinary income has generally been held to include three categories, namely, income from rendering personal services, income from property and income from carrying on a business. The legislation does not provide a definition of 'ordinary income' therefore it is necessary to turn to case law.
A personal gift received by an individual from family members, not related to any income-producing activity on the part of the individual, is not assessable income under section 6-5 of the ITAA 1997. A gift received by an individual from his or her parents or other close relatives out of natural love and affection is not assessable income in the individual's hands. Therefore, you are not assessable on money gifted to you by your parent.