Private ruling: Cash payment as a gift
Date of advice: 20 August 2025
Published: 27 October 2025
Ruling period: Year ending 30 June 20YY | Year ending 30 June 20YY | Year ending 30 June 20YY | Year ending 30 June 20YY | Year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will payments of cash given by B to the Z Investment Trust give rise to assessable income to the Z Investment Trust or Z under sections 6-5 or 6-10 of the Income Tax Assessment Act 1997 ? | A1: No. The payments of cash will not be assessable income to the Z Investment Trust or to Z.

Relevant facts and circumstances: A established an extensive investment portfolio. A married B in 19XX. They had two children, and grandchildren. Due to A suffering health problems A passed away several years ago. The practical and operational control of the family group business interests passed to their child, C. Two testamentary trusts were established for the benefit of each of A's children and their respective families. B has considerable net worth, primarily in the form of loans owing to them from one of the key entities in the family group. During B's lifetime, it is proposed that B will gift money for the benefit of each grandchild via payments to the trustees of the various discretionary trusts established for each of the grandchildren. B would draw down the loan owing to them and would gift the relevant amount to the trustee of the relevant discretionary trust. Z is the grandchild of B. Z is sole director and shareholder of Z Pty Ltd, which is the trustee of the Z Investment Trust (a discretionary trust). The payment of cash for $Y million has been provided to the trustee of the Z Investment Trust. At this stage none of the X have been actively involved in the management of the business interests of the family group and each has their own career, source of income and/or commercial interests independent of the family group business interests. Before any distributions are provided for the benefit of any grandchild, it is expected that their behaviour would adhere to the family constitution. Further proposed payments, outside the scope of this ruling, will be provided over a number of years through A's and B's respective Testamentary Trusts. Neither the grandchild nor the relevant discretionary trust established for the benefit of the grandchild (the intended recipient of the distributions) would have any legal entitlement or equitable right to such sums until the payment is made or discretion is exercised .

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 6-10