Private ruling: Income-gift
Date of advice: 21 July 2016
Published: August 2016
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Is the one-off payment, which you have received as a gift, assessable income? | A1: No.


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 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. Taxation Ruling TR 2005/13 provides principles relevant to the determination of whether the receipt of money constitutes a gift. This ruling highlights that 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. 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. 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. You received a one-off payment from the family who controlled the sold company The gift was a spontaneous gesture of personal goodwill, charity and benevolence by the family to you. The payment was made to you voluntarily and not as a result of any services that you performed. You were not an employee of the family. Accordingly the one-off payment that you received is not required to be included in your assessable income.

Relevant facts: You are chairman and director of several public companies. | You joined the board of a company which was subsequently sold. | The family members who owned a minority shareholding in the company made a one off gift to you following the sale of the company. | You had a long relationship with the family. | You received arm's length director's fees in connection with the provision of your services to the company as chairman. | Lawyers were retained to facilitate the sale, and they were fully remunerated. | You were not an adviser on the sale of the company, a bank was, and was remunerated for the sale of the company. | Your employer was not the family, it was the company.