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Edited version of your private ruling
Authorisation Number: 1012582023169
Ruling
Subject: Income-Assessable-Gifts
Question
Are you assessable on gifts received from friends, family members and acquaintances who wish to support you while you carry out volunteer work overseas?
Answer
No.
This ruling applies for the following period
Year ending 30 June 2014
Year ending 30 June 2015
The scheme commenced on
1 July 2013
Relevant facts
You and your spouse and young child will be travelling overseas for several months.
During this time you will be volunteering with various not-for-profit organisations.
A large number of friends, family and church community members have been giving you money to support you while you are away.
You will be renting out your home to cover your mortgage, so you will be using this money to live off.
You will not be working during this time. During your stay overseas an organisation will provide financial support to cover rent and basic living expenses.
People have been giving around $xx. Some people have said they want to give us $xx per month to help support the work you are doing.
You believe your local church may take up an offering, which could be around $xx or more. Some money is cash other is direct deposits into your Australian bank account.
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 gifts will be given to you voluntarily.
Therefore, in accordance with the principles outlined in IT 2674, gifts you may or will receive from friends, family members and acquaintances will not be included in your assessable income.