What are the tax consequences of receiving money as a gift?

In Australia, receiving a gift of money generally does not attract income tax—it is not considered assessable income for the recipient. However, there are some important considerations to keep in mind:

No Income Tax on Gifts

If you receive a genuine gift of money, regardless of the amount, you do not have to pay tax on it. For example, if a family member gives you $50,000 as a gift, you do not report this as income on your tax return.

No Gift Tax in Australia

Unlike some countries (e.g., the US), Australia does not have a gift tax. The person giving the gift also doesn’t need to pay a special tax just for giving it away.

Capital Gains Tax (CGT) Considerations

While cash gifts are straightforward, if the gift involves assets (like shares or property), the giver may be subject to capital gains tax. The recipient still doesn't pay tax when they receive it, but:

• If you later sell a gifted asset, you may need to pay CGT based on the asset's value at the time of the original acquisition (depending on the situation).

Centrelink and Other Reporting

If you receive a large gift and you're receiving Centrelink benefits or similar, you may be required to report the gift, as it can affect your eligibility or payment rate, especially if it increases your assets.

Foreign Gifts

If you receive a gift from overseas, it's still generally not taxable, but:

• Large foreign transactions might attract AUSTRAC attention (anti-money laundering laws).

• If you’re receiving regular payments that look like income (e.g., monthly support from family), the ATO may investigate to ensure it’s truly a gift and not disguised income.

Best Practice: Document It

To avoid confusion or issues with the ATO:

• Keep a record of large gifts.

• If possible, have the giver write a simple gift letter stating that the money is a genuine gift with no expectation of repayment or services.