Private ruling: tax consequences of a gift
Published: January 2014
Ruling period: Year ending 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Will you be liable for any income tax or capital gains tax by making a gift of cash to your children? | A1: No.

Relevant facts and circumstances: You have been diagnosed with a terminal illness and you children will inherit your estate when you pass away. Before then, you wish to give each of your children a lump sum cash gift to assist them to buy a house or pay down an existing mortgage. The money would come primarily from a cash withdrawal from an allocated pension which you hold and is tax free in your hands. The gifts maybe made: · via two or three deposits transferred from one of your accounts to your children's accounts · via a transfer from one of your account to mortgage accounts or real estate agent's trust accounts to benefit your children, or · via a bank cheque provided by you deposited into mortgage accounts or real estate agent's trust accounts to benefit your children.

Relevant legislative provisions: Income Tax Assessment Act 1997 - Section 6-5

Reasons for decision: Summary: As you have stated that the money would come primarily from a cash withdrawal from an allocated pension which you hold and is tax free in your hands, there will be no tax consequences for you as a result of the gift. This is the case regardless of whether the gift is made in one or several transactions or paid to a third party for their benefit. Please note: if your gift involves the transfer of property, such as shares or land, there may be capital gains tax implications.