Private ruling: Assessability of a gift of money.
Date of advice: 3 May 2019
Published: June 2019
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Is the receipt of an unsolicited gift from a friend non-taxable? | A1: Yes. 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. 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.

Relevant facts and circumstances: You received a gift of money from a long-time friend and business acquaintance that made a substantial gain on a sale of assets after retirement from their position. Your long term friend has provided documentation on the history of your professional relationship as well as your long term friendship and the personal connection you have. The documentation also states they have decided to make an unconditional gift based on your personal relationship and the amount is not related to the company or for a reward of services of any kind. The gift is purely due your personal friendship.

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