Cash gifts, laws and obligations

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

InvestingCoupleACT
Participant
@investingcoupleact
Join Date: 2011
Post Count: 7
September 19, 2011 - 9:18 am
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!
Scottsdale
Participant
@scottsdale
Join Date: 2011
Post Count: 63
September 19, 2011 - 10:06 am
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
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
September 19, 2011 - 11:46 am
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]
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
September 19, 2011 - 4:08 pm
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
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
September 19, 2011 - 9:52 pm
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]
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
September 20, 2011 - 1:29 am
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
MJP
Member
@mjp
Join Date: 2011
Post Count: 20
September 26, 2011 - 11:08 pm
Isn't there a limit for gift money?
After a certain amount, you have to pay tax on it??!?!
Mick C
Participant
@shape
Join Date: 2010
Post Count: 1,099
September 27, 2011 - 1:37 am
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.
bumskins
Participant
@bumskins
Join Date: 2010
Post Count: 34
September 27, 2011 - 2:25 am
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.