Cash Gift effect on tax income?

[Television]

G'day there,

Allow me to propose an entirely hypothetical situation, done simply so that all somersoft members who choose to respond may exercise and demonstrate their sound knowledge of the glorious Australian / State tax legislation.

Say a (hypothetical) young person was soon to graduate from university, and an older relative wished to give them a cash gift, both as congratulations and to assist in their starting of life. However the gifter currently receives pension benefits from Centrelink, which I believe puts a twist in the tale.

My questions regarding this entirely hypothetical situation are thus:
1) When must this cash gift be declared to the kind and benovelent ATO? At the tax submission of the young person made at end of the 12/13 Financial Year?
2) Could the hypothetical young person simply claim that the gift was received from another (non-pension receiving) relative?
2) Could the hypothetical young person avoid detection altogether by simply depositing the cash sum in small deposits to their bank account over a period of say 6 months and thus not declare the cash gift on their tax submission?

Thanks for taking the time to read this entirely hypothetical scenario and offer your thoughts on the best course of (hypothetical) action...

 

[Propertunity]

1) When must this cash gift be declared to the kind and benovelent ATO? At the tax submission of the young person made at end of the 12/13 Financial Year?

Not all gifts are taxable. You need to read:
http://www.ato.gov.au/individuals/PrintFriendly.aspx?ms=individuals&doc=/content/00227664.htm
Go to the end of the webpage (or search on the page for "gifts")

Google: "are cash gifts taxable in australia" it is a prefilled results Q, obviously asked by many.

Also the person doing the gifting may fiond that his/her pension is affected - best to talk to Centrelink first before they do anything.

2) Could the hypothetical young person simply claim that the gift was received from another (non-pension receiving) relative?

What? Lie to the ATO? Lies are never a good way to conduct life and lying to the Tax Office is just.......nuts!

2) Could the hypothetical young person avoid detection altogether by simply depositing the cash sum in small deposits to their bank account over a period of say 6 months and thus not declare the cash gift on their tax submission?

This would look like "earnings" that you are not declaring in you tax return. The ATO does data matching these days........so kinda dumb to do this.

 

[Television]

Thanks for offering your advice, Prop!

 

[rowena]

RE: It will affect the pensioner for 5 years too in regards to gifting.

Any money the pensioner gifts someone, will still be regarding as their asset for the following 5 years. So if the pensioner is trying to reduce their asset base down to get more money, then this is not necessarily going to work.

Have a read of centrelink and gifting. Rules may of changed but last time i read up on it, it was a 5 yr ruling.

So if Mum gave son 30K as a gift and mum on centrelink pension, then centrelink will still regard that 30K as a gift as a assett for mum for the next 5 yrs. You will also have to declare that gift to centrelink, and hence the ATO would find out.

Also it depends on how much money is given too!. You will need to check with centrelink!.

Remember ATO and Centrelink systems are automatically data matching...

 

[Television]

Curse their efficiencies... hypothetically.

 

[Terry_w]

Gifts generally are not taxed in Australia, unless the gift is really income.

It will affect the pension, but this is administered by Centrelink (or whatever their latest name is) and not the ATO. It comes under the Social Security Act.

Having a middle person won't really help save the pension effect because it would be considered a gift to the middle person, who then gifts it to you.

 

[datto]

TV, a gift is a gift and has got absolutely nothing to do with the ATO.

I would get a stat dec from the relo declaring the money is a gift.

Centrelink is a different kettle of fish, the gift may affect a pension, see

http://www.humanservices.gov.au/customer/enablers/assets

Be careful about making small cash deposits to avoid detection. The govt agency AUSTRAC may consider it an offence and you could get in trouble with them. Remember bank tellers are obliged to notify AUSTRAC of suspicious transactions regardless of amount.

If it was me, I'd be upfront and say its a gift, which is the truth (and keep a stat dec to back me up)

But if you are worried about the ATO sniffing around because of other taxation issues, well thats a different story.

 

[geoffw]

I had heard the there is an Mount which can be given without affecting the giver's asset tests. Something like $10k pa with a maximum of $30k in 5 years rings a bell but I'm not sure.

 

[Television]

I had heard the there is an Mount which can be given without affecting the giver's asset tests. Something like $10k pa with a maximum of $30k in 5 years rings a bell but I'm not sure.

Ah, now this is definitely worth some investigation... I shall do some digging.

*EDIT* Ding ding, we have a winner!

Found this little item on this page here.

• The value of gifts worth more than $10 000 in a single year or more than $30 000 in a five year period

 

[Television]

Thanks Datto & Terry for your replies

 

[datto]

cheers TV, hope you make a squid.