Private ruling: Gift of shares
Published: October 2014
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you assessable on gifts of shares from your parent? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2) | Income Tax Assessment Act 1997 Section 6-10 | Income Tax Assessment Act 1997 Section 15-2

Reasons for decision: Summary: The assessable income of an Australian resident includes ordinary income and statutory income derived directly or indirectly from all sources, in or out of Australia, during the income year (subsection 6-5(2) and subsection 6-10(2) of the Income Tax Assessment Act 1997 (ITAA 1997)). Ordinary income is not clearly defined in the legislation and therefore the courts have identified a number of factors that indicate whether an amount has the character of income according to ordinary concepts. It has been determined that a frequent characteristic of income receipts is an element of periodicity, recurrence or regularity ( Federal Commissioner of Taxation v. Dixon (1952) CLR 540; (1952) 10 ATD 82). Other characteristics of income that have evolved from case law also include receipts that: • are earned • are expected, and • are relied upon. Statutory income is not ordinary income but is included in assessable income by a specific provision in the tax legislation (subsection 6-10(2) of the ITAA 1997). In your case, the gift of shares from your parent or the funds resulting from their sale is not considered to be either ordinary or statutory income. Therefore, the gift of shares or the funds resulting from the sale of the shares is not assessable.

Relevant facts: Your parent, who is overseas, intends gifting shares to you for no consideration. | You intend selling the shares and transferring the money to your Australian bank account. | You are aware that there are capital gains tax consequences relating to the sale of the shares.