Private ruling: Gift of money from relative living overseas
Published: April 2015
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2014

Ruling: Q1: Is the gift of money that you will receive from your relative living overseas taxable? | A1: No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Your relative who lives overseas is going to give you an amount of money as a gift. This money will be transferred to your Australian bank account. The money will be used as a deposit on a property. There are no business or employment ties between you and your relative and the money is not being paid to you as a result of any legal obligation.

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

Reasons for decision: Summary: Subsection 6-5(1) 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. Taxation Ruling TR 2005/13 provides principles relevant to the determination of whether a transfer of money or property constitutes a gift. The term 'gift' is not defined in the ITAA 1997. Therefore, the word 'gift' takes its ordinary meaning. Rather than attempting to define a 'gift', the courts have described a gift as having the following characteristics and features: n There is a transfer of the beneficial interest in property n The transfer is made voluntarily n The transfer arises by way of benefaction, and n No material benefit or advantage is received by the giver by way of return. Taxation Ruling IT 2674 examines whether gifts or voluntary payments received by church workers as assessable income. These principles are no different from those which apply in determining whether gifts received by taxpayers in other callings or occupations are assessable income. Whether a gift is assessable income depends on the character of the gift in the hands of the recipient. Consideration is necessary of the whole of the circumstances in which the gift is received. For example, the following factors need to be taken into account: • How, in what capacity, and for what reason the recipient received the gift; and • Whether the gift is of a kind which is a common incident of the recipient's calling or occupation; and • Whether the gift is made voluntarily; and • Whether the gift is solicited; and • If the gift can be traced to gratitude engendered by some service rendered by the recipient to the donor, whether the recipient had already been remunerated fully for that service; and • The motive of the donor (but it is seldom, if ever, decisive); and • Whether the recipient relies on the gift for regular maintenance of himself or herself and any dependants. 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. In your situation, you will receive money from your relative. You will not be receiving the money as a result of any employment or business ties with your relative. Therefore the payment that you will receive as a gift will not be regarded as assessable income and is not taxable.