Private ruling: Assessable income
Date of advice: 29 August 2024
Published: 8 October 2024
Ruling period: XX June XXXX | XX June XXXX | XX June XXXX | XX June XXXX
Date scheme commenced: X July XXXX

Ruling: Q1: Are gifts given to you while volunteering in XXXXX assessable income under section 6-5 of the Income Tax Assessment Act 1997? | A1: No.

Relevant facts and circumstances: You are both residents of Australia for tax purpose. You left Australia in XXXX to volunteer in XXXX. You both volunteer in XXXX with two organizations - The XXXXX and a local community centre. You have been teaching English, repairing houses for XXXX people as a group, as well as sharing and cultivating the local people's XXXX, XXXX and XXXXX. You do not receive any money from the locals, nor do you undertake any paid work, all the activities you undertake are as unpaid volunteer, and no fees or donations are received from local participants of the organization., You hold non-immigrant "volunteer visas" and work permit which allow you to legally volunteer in XXXXX. Your visas expired in XXXX XXXX, and you intend to renew these visas in Australia. You plan on renewing your volunteer visas to continue to volunteer in XXXX for the next few years. You receive donations from people in Australia and overseas. The money is spent on various expenses in XXXX, for running the foundation (XXXX XXXX XXXX). When in Australia, you also solicit donations and gifts from friends and family, who donate to support the programme you are running in XXXX. You do not provide any goods or services to any donor in return for the gifts and donations you receive. You live entirely of the donations you receive. Previously, you utilised an organization to organize your administration and taxation obligation. As of December XXXX, you no longer use the services of that organization, and you now receive donations directly into your Australian bank account.

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

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 states that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during income year. Income derived directly or indirectly are mainly classified in three broad categories- employment income, business income and profit on isolated transaction. You do not have any employment arrangement with your volunteering organization in XXXX. Also, from the facts provided we believe that there is no business being carried on at present and we do not consider your volunteering activities as isolated transactions. Furthermore, a gift received by a church worker is assessable income under subsection 25(1) of the ITAA 1997 if it is 'income' in the ordinary sense of that word. This is usually the case only if the gift is money or convertible into money (FC of T v. Cooke & Sherden 80 ATC 4140 at 4148; (1980) 10 ATR 696 at 704). However, section 21A of the ITAA has removed the requirement of convertibility into money for property or services provided in the context of a business relationship (for example, where a self-employed evangelist receives a gift while carrying on a business of evangelism). Paragraph 28 of Taxation Ruling IT 2674 Income tax: gifts to missionaries, ministers of religion and other church workers- are the gifts income? states that gifts received by 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 (whether the church worker's office or occupation or some service rendered or to be rendered by the church worker): The Squatting Investment case 86 CLR at 633; 10 ATD at149; Hayes case 96 CLR at 54 and 57; 11 ATD at 72; Smith v. FC of T (1987) 164 CLR 513 at 526; 87 ATC 4883 at 4890; (1987) 19 ATR 274 at 282; b) It is possible to relate the receipt of the gift to any income producing activity on the part of the church worker, Hayes case 96 CLR at 57; 11 ATD at 73; 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: Hayes case 96 CLR at 56-7; 11 ATD at 73; Scott case 117 CLR at 527; 14 ATD at 293. Having considered the relevant facts and circumstances, we conclude that there is no connection between the receipt of the gifts and any income-producing activity by you. Therefore, the gifts you are receiving are not assessable income.