Private ruling: Income
Date of advice: 19 July 2017
Published: November 2017
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Question and answer | Is the transfer of funds from Country Y to Australia taxable in Australia? | No.

Relevant facts and circumstances: You are a temporary resident of Australia and a foreign resident for taxation purposes of Australia. You are studying in Australia. You received a transfer of money from your family from Country Y your home country. The transfer of money is for your living expenses and study expenses in Australia. Your spouse organised the transfer of the funds from a third party in Country Y as per Country Y transfer rules. The money was transferred from party A into party B bank account in Australia and then to your bank account.

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

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (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. Ordinary income means income according to ordinary concepts. It is included in your assessable income unless it is exempt, or is made non-assessable. Some examples of income include salaries, wages, and proceeds of carrying on a business, rent, interest, and dividends. Typical examples of items which are not generally income include lottery prizes, personal transfers, proceeds from the sale of a capital asset, loans, and gifts. Similarly, subsection 6-10(4) of the ITAA 1997 provides that that the statutory 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. Statutory income means an amount which is not ordinary income but which is included in your assessable income by statutory provision. Some typical examples of statutory income are dividends and capital gains. The money transferred from Country Y was from your family and is for living expenses and study expenses in Australia. This income is therefore not subject to tax in Australia.