Private ruling: Gifts and donations
Published: June 2012
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Q1: Is any of the money that you receive from your relative taxable? | A1: No | Q2: Is all the money provided by donors in support of your work taxable? | A2: Yes | Q3: Is all the money that you receive in a collection box at performances taxable? | A3: Yes

Relevant facts and circumstances: You put on performances for groups and you derive income for this by either invoicing the group for your show or you receive the takings when an admission fee is charged. In both situations you also place a donation box at the entrance to collect donations from the audience after the show. You receive a regular monthly payment from friends that are deposited directly into your bank account. You have been told that they do this because they support the work that you are doing. You say these payments are unconditional. You also receive a similar payment from an anonymous donor and you assume that this is also in support of the work that you are doing. Your relative also makes periodic payments into your account which are made out of natural love and affection.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 15-2

Reasons for decision: Summary: A gift received by a person is assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) if it is income in the ordinary sense of that word. Section 15-2 of the ITAA 1997 provides that a taxpayer's assessable income includes the value to the taxpayer of all allowances, gratuities, compensations, benefits, bonuses and premiums which are allowed, given or granted to the taxpayer in respect of, for or in relation (directly or indirectly) to any employment of or services rendered by the taxpayer. In your case, the money donated to you by your audience following your performances directly relates to the service rendered by you by way of your performance. Similarly, the monetary gifts you regularly receive from friends and an anonymous donor are in support of the work that you do. Therefore these donations you receive relate to the services you render to the groups, and are assessable under section 15-2 of the ITAA 1997. | Detailed Reasoning - Relative's payments: A voluntary payment or gift which is properly characterised in the hands of the recipient as a gift and that is not related in any way to personal exertion will not be assessable. In your case, the periodic payments from your relative have the characteristics and features of a 'gift'. They are not related to services rendered; therefore, these payments are not assessable income.

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