Private ruling: Gift from relatives
Published: February 2014
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Does money gifted to you by a relative form part of your assessable income? | A1: No.

Relevant facts and circumstances: A relative is giving you a sum of money out of natural love and affection.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2)

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia. Ordinary income is income according to ordinary concepts. Ordinary income has generally been held to include three categories, namely, income from rendering personal services, income from property and income from carrying on a business. The legislation does not provide a definition of 'ordinary income' therefore it is necessary to turn to case law. A personal gift received by an individual from family members, not related to any income-producing activity on the part of the individual, is not assessable income under section 6-5 of the ITAA 1997. A gift received by an individual from his or her parents or other close relatives out of natural love and affection is not assessable income in the individual's hands. Therefore, you are not assessable on money gifted to you by your relative.