Private ruling: Assessability of a gift of money
Published: February 2014
Ruling period: Year ended 30 June 2013 | Year ending 30 June 2014
Date scheme commenced: 1 July 2012

Ruling: Question and answer | Is the money gifted to you by your family member included in your assessable income? | No.

Relevant facts and circumstances: Your parent transferred you a sum of money as a gift to assist you in funding the purchase of a home.

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, during the income year. Taxation Ruling TR 2005/13 provides principles relevant to the determination of whether a transfer of money or property constitutes a gift. The term 'gift' is not defined in the ITAA 1997. Therefore, the word 'gift' takes its ordinary meaning. Rather than attempting to define a 'gift', the courts have described a gift as having the following characteristics and features: · There is a transfer of the beneficial interest in property · The transfer is made voluntarily · The transfer arises by way of benefaction, and · No material benefit or advantage is received by the giver by way of return. In your case, you received payments from your family member as a gift to help fund the purchase of a home. This money was therefore received by you for personal reasons and there is no connection between the gift and income-producing activities. Therefore the gift received is not assessable income.