Private ruling: Gifts
Date of advice: 15 June 2020
Published: June 2020
Ruling period: Year ended 30 June 2020 | Year ended 30 June 2021
Date scheme commenced: 1 July 2019

Ruling: Q1: Are payments given to you as gifts by your parents included in your assessable income? | A1: No. The gift of money does not have the characteristics of income. The money is not earned, nor does it have any element of regularity or periodicity. The money is being given to you because of the familial relationship between you and your parents and not in respect of, or in relation to, any income-producing activity of yours. It is being given to you voluntarily by way of benefaction and no material benefit or advantage will be received by your parents in return. The money is a gift from your parents and is not assessable income. As such, you do not need to include the amount anywhere in your tax return.

Relevant facts and circumstances: You and your spouse purchased a block of land in State A in late 2019 with the intention of building a family home. Your parents live in Country A and now wish to gift you an undetermined sum of money to assist in building your family home. You believe the amount they wish to gift will exceed $X but also will be less than $Y. Your parents will arrange to gift these funds to you by transferring funds to a family friend in Country B who will then transfer the funds to your account in Australia. This transfer process is necessary as your parents cannot transfer funds out of Country A directly to your account because of government restrictions on money transfers out of that country. You believe the gift will be paid as a series of irregular payments. These payments are gifts made without any services or considerations on your part. The payments will not be in return for any service and are being given voluntarily as a benediction to express your parents' love and affection. The payments will not generate any material benefit or advantage to either your parents or the person in Country B who will eventually transfer the payments to your account. The payments will be devoted to building a family home for you and your spouse and have no other purpose or benefit to you, your parents' or your parents' friend in Country B.

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