Private ruling: Loaned money
Published: November 2013
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2013

Ruling: Q1: Is there any amount which would be included in your assessable income from loaning money to your parent and step-parent for a period before they then return the money to you? | A1: No.


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 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. Ordinary income is income according to ordinary concepts. Ordinary income has generally been held to include three categories, namely, income from rendering personal services, income from property and income from carrying on a business. The legislation does not provide a definition of 'ordinary income' therefore it is necessary to turn to case law. Statutory income consists of those amounts that are specifically included in your assessable income by a provision of the taxation legislation. The funds returned from family members are not ordinary income and is not statutory income. The funds are a return of capital. Therefore, no amount is included in your assessable income.

Relevant facts: You intend loaning your parent and step-parent some money which they will use to offset their mortgage. | After a period, they will return the money to you. | No interest will be paid to you on the funds.