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Ruling

Subject: Gifts from friends, family members and acquaintances

Question

Are you assessable on gifts received from friends, family members and acquaintances?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commenced on

1 July 2011

Relevant facts

You intend going overseas to volunteer for twelve months to assist the poor and disadvantaged in the areas of agriculture, education and language tutoring.

Your accommodation will be provided free.

You will support yourselves from Centrelink payments which are paid for a limited period.

It is possible that friends, family members and acquaintances may give you gifts of money or goods as a demonstration of their support. Any such gifts would be entirely spontaneous and voluntary and would neither be expected or the result of any prior arrangement.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 6-5(2)

Income Tax Assessment Act 1997 Section 6-10

Income Tax Assessment Act 1997 Section 15-2

Reasons for decision

Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.

Section 6-10 of the ITAA 1997 provides that amounts that are not ordinary income may be included in assessable income under another provision as statutory income. Section 15-2 of the ITAA 1997 provides that the value of all allowances, gratuities, compensation, benefits, bonuses and premiums given or granted in respect of employment or services rendered are included in assessable income.

Therefore, if a gift is considered to be ordinary income or an allowance, a gratuity or a benefit under section 15-2 of the ITAA 1997, it will be assessable income.

Taxation Ruling IT 2674 deals specifically with the assessability of gifts received by church workers. Based on established case law, the ruling at paragraph 32 provides that: 

· a personal gift received for personal reasons and not as a result of any income-producing activity on the part of the recipient is not assessable income for income tax purposes

· a gift or gratuity made on grounds personal to the recipient is not assessable income

· if a gift is referable exclusively to the attitude of the donor personally to the church worker personally, it is not assessable income, and

· a voluntary payment received by a church worker from a family member, a friend or an acquaintance, or a fellow worker is prima facie received on grounds personal to the recipient, or to assist his or her personal needs - if nothing more than this appears from a consideration of the whole circumstances of the case, the payment is not assessable income.

Gifts you may receive from friends, family members and acquaintances will be given to you for personal reasons and not as a result of any income-producing activity on your part. The gifts of money would be a demonstration of support, and not for any services you will perform. The gift will be given to you voluntarily.

Therefore, in accordance with the principles outlined in IT 2674, gifts you may receive from friends, family members and acquaintances will not be included in your assessable income.