Private ruling: Gift
Date of advice: 8 June 2017
Published: October 2017
Ruling period: Year ended 30 June 2017 | Year ended 30 June 2018
Date scheme commenced: 1 July 2016

Ruling: Q1: Is the payment from your relative assessable income? | A1: No.

Relevant facts and circumstances: Your relative would like to gift to you a sum of money. The money will be given to you voluntarily out of affection. It is not the product of any employment, services rendered, or any business. You don’t expect the payment because there is no obligation on your relative to make the payment, The amount will not be given on a regular basis. You don’t rely on the payment for your day to day living expenses.

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 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 the receipt of money constitutes a gift. This ruling highlights that 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. Whether a gift is assessable income depends on the character of the gift in the hands of the recipient. Consideration is necessary of the whole of the circumstances in which the gift is received. A personal gift received by you for personal reasons, where there is no connection between the receipt of the gift and any income-producing activity by you, is not assessable income. In your situation, you will receive a one-off payment from a relative. The payment will be made to you voluntarily and not as a result of any services that you performed. Accordingly the payment that you will receive is not required to be included in your assessable income.