Private ruling: Income
Published: July 2014
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Will the amounts you receive to help pay for your child's private program be assessable income? | 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 child has a medical condition. You will raise funds for treatment.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2).

Reasons for decision: Summary: The donations and gifts received will not be regarded as assessable income. | Detailed Reasoning - Detailed reasoning: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a taxpayer includes income according to ordinary concepts (ordinary income). Generally, a gift is regarded as a personal windfall gain or as the result of a domestic or personal arrangement and not as ordinary income unless you have received the money because of, in respect of, or in relation to any income-producing activity of yours. 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: • There is a transfer of the beneficial interest in property • The transfer is made voluntarily • The transfer arises by way of benefaction, and • 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 are 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: (a) how, in what capacity, and for what reason the recipient received the gift; and (b) whether the gift is of a kind which is a common incident of the recipient's calling or occupation; and (c) whether the gift is made voluntarily ; and (d) whether the gift is solicited; and (e) 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 (f) the motive of the donor (but it is seldom, if ever, decisive); and (g) 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. Nor is a gift assessable income if it is referable exclusively to the attitude of the donor personally to you. In your situation, you plan on raising funds. The proceeds will be put towards a private treatment program to help your child. It is accepted that the payments will not be for any other use than to help offset the treatment program expenses. It is also accepted that the donors will be motivated by a desire to assist your child to obtain the treatment. Therefore the donations and gifts received will not be regarded as assessable income.