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Re: receiving money gift from overseas friend

Newbie

Views 5151

Replies 3

If my foreign friend transfer me money gift to help out with my child education, as a gift to my Australian account, do I need to report on my tax return and pay tax of any kind? Also, what information does my friend need to provide to justify it's a free gift out of good will? 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Superuser

Replies 2

Hi @2020taxquestion,

 

A gift is defined as a transfer of money that is made voluntarily and whereby the donor does not expect anything in return for the gift. Cash presents or similar payments you receive from your family members are not included in your taxable income.  If your friend  are giving you money to pay for school fees etc, this probably won't be part of your taxable income.

 

Generally, money given as a gift from a family member / friend for personal reasons and the gift isn't connected to any income-producing activities by you, is not assessable income and not required to be reported in your tax return. However, any interest earned on the money in an Australian bank account will need to be declared as interest in your tax return and subject to tax.

Taxation Ruling TR 2005/13 highlights the following characteristics and features of a 'gift' as follows:
•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.

You can find more information about income you must declare on our website

 

Hope this helps!

3 REPLIES 3

Most helpful response

Superuser

Replies 2

Hi @2020taxquestion,

 

A gift is defined as a transfer of money that is made voluntarily and whereby the donor does not expect anything in return for the gift. Cash presents or similar payments you receive from your family members are not included in your taxable income.  If your friend  are giving you money to pay for school fees etc, this probably won't be part of your taxable income.

 

Generally, money given as a gift from a family member / friend for personal reasons and the gift isn't connected to any income-producing activities by you, is not assessable income and not required to be reported in your tax return. However, any interest earned on the money in an Australian bank account will need to be declared as interest in your tax return and subject to tax.

Taxation Ruling TR 2005/13 highlights the following characteristics and features of a 'gift' as follows:
•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.

You can find more information about income you must declare on our website

 

Hope this helps!

Newbie

Replies 1

thank you for your reply.

1) Does my friend need to provide any document to show it's free gift?

2) Is there any restriction on the amount of money and the frequency of transfering?

 

thanks a lot

Former Community Support

Replies 0

Hi @2020taxquestion

 

Your friend doesn't need to provide any documentation and there is no restriction on the amount or frequency. As long as the payments remain as a gift under the definition we have provided in our last response. 

 

All the best!