Edited version of private advice

Authorisation Number: 1012650709169

Ruling

Subject: Assessability of tithes

Question

Are you assessable on money gifted into your bank account?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 20XX

The scheme commenced on

1 July 2012

Relevant facts

You are a leader, founder and director of an enterprise.

You are also an employee of a company related to the enterprise.

As well as offering seminars to the public the enterprise offers vocational training.

You have received tithes directly into your personal bank account. No instruction to tithe directly to you is given. The method of receiving tithes is direct deposit to your bank account.

The tithes are not solicited. On a seldom occasion, you have no idea who has given the tithe as there is no description on the bank transaction. On other occasions the name of the person is placed on the bank deposit.

Your personal bank account details have been provided by your employer.

On only one occasion your bank account details were publicly announced. As a teacher continuing education training program your bank details were given to the group because a number of people had been asking for them as they wanted to make gifts to you.

An employee of the Company has also been asked for your bank details from time to time by people wishing to make gifts.

In early 20XX, the teaching contract for 20XX/YY was revised and a sentence included which suggested teachers tithe to you in alignment with their heart and means at the time in accordance with the philosophy of the teachings although it was made clear that such tithing is outside of the contractual obligations of the teacher.

When you became aware of this provision you requested it be deleted and this was done.

Tithes received are for a variety of amounts.

A particular tithe was given by a person who wanted to give assistance in the internal renovations of a rental property owned by you and your spouse. The building is rented by you and your spouse to the enterprise.

The Contract to teach for and on behalf of the enterprise states that all teachers are to disseminate the body of work to the public.

Recently you corresponded with a number of known tithe donors asking their intentions when they tithe. The majority responded that they give tithes as a personal gift and expression of love for you. Further, the respondents acknowledged that their gifts were not in connection with any services.

Whilst the identity of a minor number of tithe givers is not known most of the tithe givers were teachers and attendees.

All of the people in the teacher group are close personal friends. Your child and your partner are in the teacher group. Whilst you know the people in the attendee category, you have little to do with them personally. They attend the centres. The people in the unknown category would probably be known if seen, but you do not recognize the names. The people in the teacher category are also friends and frequent visitors to your home.

When the frequency of the gifts was investigated, it was found tithes were made by various people on a weekly, fortnightly or irregular basis.

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 (ITAA 1997) provides that the assessable income of an Australian resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

The Commissioner's view on the assessability of gifts received by missionaries, ministers of religion and other church workers is contained in Taxation Ruling IT 2674.

A gift received by a church worker is assessable income under section 6-5 of the ITAA 1997 if it is 'income' in the ordinary sense of that word.

In accordance with IT 2674, whether a gift is assessable income depends on the quality or the character of the gift in the hands of the recipient. Consideration must be given to the whole of the circumstances in which the gift is received. For example, the following factors need to be taken into account:

• how, in what capacity, and for what reason the recipient received the gift;

• whether the gift is of a kind which is a common incident of the recipient's calling or occupation;

• whether the gift is made voluntarily;

• whether the gift is solicited;

• if the gift can be traced to gratitude engendered by some service rendered by the recipient to the donor, whether the recipient had already been remunerated fully for that service;

• the motive of the donor (but it is seldom, if ever, decisive); and

• whether the recipient relies on the gift for regular maintenance of himself or herself and any dependants.

Paragraph 14 of IT 2674 states that gifts are often made to church workers both as an expression of goodwill towards them personally and also as a reward for some income-producing activity of the church worker or in recognition of the church worker's calling or occupation. If a substantial reason - it does not have to be the dominant reason - a gift is received by a church worker in his or her occupation or some income-producing activity on his or her part, the gift is income, even though the gift is also received on personal grounds.

Paragraph 33 of IT 2674 provides an example where a church worker receives an unsolicited gift from a person who is motivated to send it by the worker's devoted pastoral care and evangelistic commitment. The employment as a church worker is a substantial reason for the gift being received, even though it is a one-off receipt. The worker should include the gift in his/her tax return for the year of income in which he/her receives the gift, as it is assessable income.

In your case, the donations of money made directly to you are mainly from teachers and attendees and clearly emanate from your role as a leader.

Therefore it is considered that the donations of money you received are assessable income.