Private ruling: Assessable income
Published: April 2012
Ruling period: Year ended 30 June 2003 | Year ended 30 June 2004 | Year ended 30 June 2005 | Year ended 30 June 2006 | Year ended 30 June 2007 | Year ended 30 June 2008 | Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2002

Ruling: Q1: Are the funds received via a loan from your parents included in assessable income? | A1: No.

Relevant facts and circumstances: You have borrowed a sum of money from your parents. These funds are to be used for private purposes.

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

Reasons for decision: Summary: The money you received is capital in nature and not assessable income. | Detailed Reasoning - Detailed reasoning: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) describes that the assessable income of an Australian resident includes ordinary income, derived directly and indirectly from all sources in or out of Australia. Ordinary income has generally been held to include three categories: · income from rendering personal services · income from property, and · income from carrying on a business. Other characteristics of ordinary income include receipts that: · are earned · are expected · are relied upon, and · have an element of periodicity, recurrence or regularity. In your case, you have borrowed money from your parents and used the funds for private purposes. The amount received is not considered to be ordinary income. The money was not for any services performed and the money was given voluntarily. The money is considered to be a capital sum and is therefore not assessable.

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