Edited version of private advice

Authorisation Number: 1051899694057

Date of advice: 20 September 2021

Ruling

Subject: Assessable income

Question

Are gifts given to you while volunteering in Country A assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a resident of Australia for taxation purposes.

You departed Australia in late 20XX to travel to Country A with your spouse where you are volunteering with 2 organisations - Organisation A and Organisation B.

You will be teaching English, repairing local housing as well as sharing and cultivating local citizens' artistic, spiritual and life skills.

No money is received by any participant in these volunteering organisations. Also, no fees or donations are received from local citizens who participate in activities organised by the volunteer organisations.

You and your spouse hold non-immigrant "volunteer visas" which allow you to live and work in Country A.

You receive gifts and donations from friends and family in Australia who donate to support the programs you are running. You solicit these gifts and donations through an outreach program of emails to friends, family and supporters.

You believe the motivation of the donors and gift givers are entirely altruistic as they receive no benefit or reward for giving. All such donations and gifts are given voluntarily.

Your volunteer visas expire in 20XX, but they are year long visas which you can renew in-country. You plan on renewing your volunteer visas to continue to volunteer in Country A for the next few years and plan on returning to Australia for a few months in 20XX.

Country A has a double taxation agreement with Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Reasons for decision

Subsection 6-5(2) of the 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.

In general, income is classified into three broad categories - employment income, business income and profit on isolated transactions.

It is evident that there is no employment arrangement in existence for your work in Country A, there is no evidence of a business being carried on and your volunteering activities cannot be described as an isolated transaction.

Taxation Ruling IT 2674 Income tax: gifts to missionaries, ministers of religion and other church workers - are the gifts income? (IT 2674) provides guidelines for determining whether gifts received by church workers (including missionaries and ministers of religion) are assessable income.

Regardless of how your volunteering role is described, the principles contained within the ruling can be applied to your situation.

Paragraph 28 of IT 2674 states that gifts received by a church worker are assessable income if:

a)    they are received because of, in respect of, for, or in relation to any income-producing activity of the church worker;

b)    it is possible to relate the receipt of the gift to any income-producing activity on the part of the church worker;

c)    it is possible to point to any employment, personal exertion or other income-earning activity by the church worker of which the receipt of the gift is in a relevant sense a product or incident.

In considering your circumstances as a whole, it is considered that there is no connection between the receipt of the gifts and any income-producing activities by you.

Accordingly, the gifts you receive are not assessable income.