Hi all,

I am planning to move to Sydney in June this year, and will be aiming to buy a house when I feel I am settled.

To help out, my parents have offered to give me some money towards a place.

Are there any gift tax considerations in Australia that I should be aware of? I understand that I will have to pay tax on any interest made on money, which I wiould declare in my tax return. But would I be liable to pay gift or capital gains tax if my folks sent me, say, $100,000 towards a house?

Would this gift money have to be declared in the tax return as income, or is it declared as something else, or not at all?

Waiting and sending the money beofre I leave is not an option, as the funds won't have been released prior to my departure date.

I would really appreciate some guidance on this if anybody could help, or at least point me in the direction of someone that can!

Many thanks,

D

According to the Australian Masters Tax Guide under exemptions from tax - "A personal gift not related directly or indirectly to services rendered by a recipient, either as an employee or otherwise, to the donor of a gift is non-assessable. (10-070)"

Therefore if your parents give you an outright gift of the money then you should not be assessable to tax while you are resident in Australia.

Your parents should look into giving you the money under a covenant as they may be able to get a tax benefit in the UK.

Hi Paddy,

Thanks for your response. That is good to know.

For someone who isn't as up to speed with my UK tax law as perhaps I could be, can you briefly describe what you mean by a Covenant in terms of a gift, and how it may be more tax efficient than a simple gift?

Cheers,

D

sorry drp looks like my thoughts on Deeds of Covenant are way out of date. I had a quick look on some internet sites and it appears that Deeds of Covenant have been recently replaced by Gift Aid and this appears to only apply to gifts to charities.

Used to be that gifts made under a deed of covenant to another person were entitled to a tax deduction but this now only applies to gifts to charities.

Thanks for that Paddy.

I assume that all substantial gifts now fall into the category of Potentially Exampt Transfers with the application of the tapered seven year rule.

Wretched Gordon Brown is determined to have his pound of flesh...

D