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Edited version of your written advice
Authorisation Number: 1012738737414
Ruling
Subject: Income - gifts
Question 1
Do the monetary gifts from your parent form part of your assessable income?
Answer
No.
This ruling applies for the following periods:
Income year ended 30 June 2011
Income year ended 30 June 2012
Income year ended 30 June 2013
Income year ended 30 June 2014
Income year ending 30 June 2015
Income year ending 30 June 2016
The scheme commences on:
1 July 2010
Relevant facts and circumstances
Your parent has provided you with gifts of money out of natural love and affection to financially support you and your family. You expect that these gifts will continue on the same basis for the remainder of the period that this ruling applies to.
These gifts have either been provided to you individually, or jointly with your spouse.
These gifts have been used to meet your family's daily living expenses.
The gifts do not have a connection to any income-producing activity of you or your family.
The gifts are sourced from funds that are beneficially owned by your parent in their own name.
Relevant legislative provisions
Income Tax Assessment Act section 6-5 and
Income Tax Assessment Act section 6-10.
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(2) of the ITAA 1997 provides that amounts that are not ordinary income may be included in assessable income under another provision as statutory income.
Taxation Ruling IT 2674 deals specifically with whether gifts received by church workers are assessable; however, from this ruling some general principles for determining whether gifts are considered to be assessable income can be established. Paragraph 32 of IT 2674 states:
• a personal gift received for personal reasons without any connection to 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 it is not assessable income, and
• a voluntary payment received 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.
All of the above principles are derived from relevant case law.
You have advised that the gifts of money that you individually, or jointly with your spouse, received at various intervals from your parent were made out of natural love and affection to financially support you and your family and refurbish the home that your family resides in. You expect that this arrangement of receiving gifts from your parent will continue on the same basis for the remainder of the period that this ruling application covers.
There is no evidence which suggests that when the funds were provided to you or your spouse a resulting trust was established, in that you held the funds on trust for your parent. Rather, the evidence supports the conclusion that the funds were provided to you or your spouse on the basis of your parent's natural love and affection towards you and your family. The intention when providing the funds to you was that the beneficial ownership of the funds would pass to you individually, or jointly with your spouse. As such, it is our view that the funds were provided to you as outright gifts with no intention that the funds ever be repaid or returned.
These gifts do not have a connection to any income-producing activity of you or your family. The gifts were voluntarily made to you individually, or jointly with your spouse. In this regard, we consider that the gifts would be characterised under the first bullet point of paragraph 32 of IT 2674.