| Disclaimer This edited version has been archived due to the length of time since original publication.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. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012136775987
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Subject: Assessable income
Question
Are the funds received via a loan from your parents included in assessable income?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2003
Year ended 30 June 2004
Year ended 30 June 2005
Year ended 30 June 2006
Year ended 30 June 2007
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
The scheme commenced on:
1 July 2002
Relevant facts and circumstances
You have borrowed a sum of money from your parents.
These funds are to be used for private purposes.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5.
Reasons for decision
Summary
The money you received is capital in nature and not assessable income.
Detailed reasoning
Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) describes that the assessable income of an Australian resident includes ordinary income, derived directly and indirectly from all sources in or out of Australia.
Ordinary income has generally been held to include three categories:
· income from rendering personal services
· income from property, and
· income from carrying on a business.
Other characteristics of ordinary income include receipts that:
· are earned
· are expected
· are relied upon, and
· have an element of periodicity, recurrence or regularity.
In your case, you have borrowed money from your parents and used the funds for private purposes. The amount received is not considered to be ordinary income. The money was not for any services performed and the money was given voluntarily. The money is considered to be a capital sum and is therefore not assessable.