Private ruling: Income
Date of advice: 19 July 2017
Published: November 2017
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Question and answer | Is the transfer of funds from Country Y to Australia taxable in Australia? | No.

Relevant facts and circumstances: You received a transfer of funds from party A in Country Y into your Australian bank account on behalf of party B. The money was from party B’s family for their living expenses and study expenses in Australia. You transferred the funds once received in your Australian bank account to party B’s bank account.

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. Ordinary income means income according to ordinary concepts. It is included in your assessable income unless it is exempt, or is made non-assessable. Some examples of income include salaries, wages, and proceeds of carrying on a business, rent, interest, and dividends. Typical examples of items which are not generally income include lottery prizes, personal transfers, proceeds from the sale of a capital asset, loans, and gifts. Similarly, subsection 6-10(4) of the ITAA 1997 provides that that the statutory 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. Statutory income means an amount which is not ordinary income but which is included in your assessable income by statutory provision. Some typical examples of statutory income are dividends and capital gains. You received the transfer of funds from Party A in Country y on behalf of Party B. This money is for their living expenses and study expenses in Australia. You were only used as the means to get the money from country Y to Australia and the funds were not used by you. The money is therefore not taxable to you in Australia.