Private ruling: Assessable income – Gifts
Date of advice: 8 April 2019
Published: May 2019
Ruling period: Year ending June 2019 | Year ending June 2020
Date scheme commenced: 1 April 2019

Ruling: Q1: Will the gift from your family member form part of your assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. Subsection 6-5(2) of the 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 Income tax: tax deductible gifts - what is a gift provides principles relevant to the determination of whether the receipt of money constitutes a gift. In your situation, you will receive payments from your family member to help you pay off your house loan as well as some other debts. The payments you will receive will be made to you voluntarily and not as a result of any services that you performed. Accordingly the payments that you will receive is not ordinary income and therefore not to be included in your assessable income.

Relevant facts and circumstances: You are an Australian citizen. You are residing in Australia with your spouse and children. You have recently refinanced your home to help pay off a debt. Your family member resides overseas. They will be sending over a gift to help you pay off some of your house loan and other debts. Because there is a limit on the amount of money allowed to be transferred internationally the gift will have to be split up over 3 or 4 monthly payments. There is no employment relationship between you and your family member. The payment is not in relation to any services provided by you. There is no loan arrangement or repayments for the gifted amount.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 subsection 6-5(2)