Private ruling: Assessable income and gifts
Date of advice: 28 June 2016
Published: August 2016
Ruling period: Year ended 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are the amounts you received from your family assessable income? | A1: No.

Relevant facts and circumstances: Your family transferred money to you between 20XX and 20YY. The money transferred amounts to $XXX. Your family currently live overseas. Your family are giving you this money to help with living expenses and to reduce your debt. Your family have no expectation of you repaying the money back to them at a later date.

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

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that if you are an Australian resident, your assessable income includes ordinary income you derived, directly or indirectly, from all sources, whether in or out of Australia during the income year. Taxation Ruling TR 2005/13 provides the principles relevant to the determination of whether a transfer of money or property constitutes a gift. The ITAA 1997 doesn't define the term 'gift'. 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. A personal gift received by you from a third party that is not payment for income-producing activities is not considered assessable income. It is accepted that these payments, from your family, was for the sole purpose of assisting you with living expenses and reducing your debt. Therefore the gift you received is not assessable income.