Private ruling: assessable income
Date of advice: 30 November 2017
Published: April 2018
Ruling period: Year ended 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2016

Ruling: Q1: Does the money gifted to you by your family form part of your assessable income? | A1: No

Relevant facts and circumstances: Your family gifted you money to help you purchase an asset in Australia. There is no employment relationship between you and your family. There is no loan agreement between you and your family. The payment is not in relation to any services provided.

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 Income tax: tax deductible gifts – what is a gift provides principles relevant to the determination of whether the receipt of money constitutes a gift. TR 2005/13 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 received a payment from your family to help you purchase an asset in Australia. The payment was made to you voluntarily and not as a result of any services that you performed. Accordingly the payment that you received is not assessable income and does not need to be included in your income tax return. The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.