All Topics / Finance / Cash gifts, laws and obligations

Viewing 9 posts - 1 through 9 (of 9 total)
  • InvestingCoupleACT
    Participant
    @investingcoupleact
    Join Date: 2011
    Post Count: 7

    Hi Guys,

    Anyone know what the law is when receiving a cash gift from a relative is?  Do we have to pay tax on this?  I heard something along the traps that all my relative needs to do is write a statement stating that is a non refundable cash gift??

    Basic gist is that we want to get a home – we have a deposit but are around 25k short – a relative has offered to give us the 25k as a present but we are not too sure as to what is required from us.

    We live in the ACT.

    Thanks guys!

    Profile photo of ScottsdaleScottsdale
    Participant
    @scottsdale
    Join Date: 2011
    Post Count: 63

    Hi guys,

    Nothing needs to be done if the gift is not related to employment as there's no gift tax in Aus.

    The ATO uses its 'nexus' rule to determine the relationship between the gift and employment and whether or not it's taxable.
    Eg, if you were receiving the $25k in $200 in weekly instalments, the ATO may treat this as a source of income and consider it taxable.

    In your case, it's a once off payment from a friend so no tax is payable. I tried searching the the ATO website for a link to a more official source but not much luck. It would be a good idea to get something in writing regardless, always good to have some sort of 'paper trail' for the lovely people at the ATO.

    Kind regards,
    Derek

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    InvestingCoupleACT wrote:
    Hi Guys,

    Anyone know what the law is when receiving a cash gift from a relative is?  Do we have to pay tax on this?  I heard something along the traps that all my relative needs to do is write a statement stating that is a non refundable cash gift??

    Basic gist is that we want to get a home – we have a deposit but are around 25k short – a relative has offered to give us the 25k as a present but we are not too sure as to what is required from us.

    We live in the ACT.

    Thanks guys!

    Hi there

    Using gifted funds is generally fine, providing that you can show at least 5% of the funds were "genuinely" saved over a 3 month period (that's assuming the loan amount is higher than 90% LVR).

    If the loan is 90% or less, then there's lenders that will do 90% lends without gen savings. There are also lenders that will do 95% non-gen, but your options are very limited in this space.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    What do you mean no taxes on gifts? I have been paying tax on my christmas presents for years!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    Terryw wrote:
    What do you mean no taxes on gifts? I have been paying tax on my christmas presents for years!

    But Terry…..you also depreciated a dog once :)

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    Jamie M wrote:
    Terryw wrote:
    What do you mean no taxes on gifts? I have been paying tax on my christmas presents for years!

    But Terry…..you also depreciated a dog once :)

    Cheers

    Jamie

    Don't worry, that dog was a gift and the appropriate tax was paid first.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of MJPMJP
    Member
    @mjp
    Join Date: 2011
    Post Count: 20

    Isn't there a limit for gift money?
    After a certain amount, you have to pay tax on it??!?!

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099
    InvestingCoupleACT wrote:
    Hi Guys,

    Anyone know what the law is when receiving a cash gift from a relative is?  Do we have to pay tax on this?  I heard something along the traps that all my relative needs to do is write a statement stating that is a non refundable cash gift??

    Basic gist is that we want to get a home – we have a deposit but are around 25k short – a relative has offered to give us the 25k as a present but we are not too sure as to what is required from us.

    We live in the ACT.

    Thanks guys!

    It’s probably been answered already- but GIFT are not taxed, but any interest you occur when you place this gift into a savings account is…

    Regarding the writing it’s a non refundable cash gift this is for the bank’s purpose of lending money to you for the purchase, they need to know if this is going to be a personal loan or not etc…But be aware NOT all lenders allow gift as deposits and if they do it be under a certain LVR 80-90%

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of bumskinsbumskins
    Participant
    @bumskins
    Join Date: 2010
    Post Count: 34

    Tax has already been paid on the gift, by the person giving the gift. They paid income tax on the income they have gifted to you.

Viewing 9 posts - 1 through 9 (of 9 total)

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