Hi,
My parents (living overseas) want to help me out on my first home with some cash injection. I heard that gifts aren't taxed in Australia but you need a deed of gift for it.
Where can i get this deed of gift from? Do i have to get it before or after the money is sent?
Thanks!
Yes..yes..yes Just get your parents to send it to my Western union bank account for a safer and more pleasant transaction.
Who is requiring this?
If it is the ATO or AUSTRAC, then a signed letter should suffice.
If it is the mortgage company, they will tell you what is acceptable, but it is likely a declaration (so, just a typed document saying the signatories declare it to be true) stating the amount of the gift, date and confirming it is not a loan to be repaid.
It should be signed, and they may require it to be witnessed, or possibly in the form of a statutory declaration which needs to be witnessed by a JP, lawyer, policeman etc.
Whoever is requesting it should be able to give you a suitable template for free.
I was worried about ATO requiring this because they want to tax me on my gift
A deed of gift is just a document that states that the funds are a gift, and not for any other purpose (e.g. you holding it on their behalf, a purchase, etc). A deed should just contain what your parents are doing, dated, and signed by them and an unrelated witness.
some cash injection.
How are we talking about? $50k or $2m?
6 figures, so in between
The amount will get reported to the austrac, but that is about.
A stat dec from the gifter and one from the giftee may help, but not necessarily.
ATO website says "rewards or small gifts such as cash birthday presents (however, gifts may be taxable if they are large amounts or you receive them as part of a business-like activity or in relation to your income-earning activities as an employee or contractor)"
So large amount gifts are taxable?
You don't need a deed of gift. You only pay tax on any income derived from your parents gift so if you are buying a property it shouldn't matter
But wouldn't ATO want proof that it's a gift?
Only if the ATO ask you need to prove and you can say it was a gift from your parents. If your parents dova cheque or funds transfer into your account then not a problem as easy to trace it back for proof. If cash then harder to prove
ATO website says "rewards or small gifts such as cash birthday presents (however, gifts may be taxable if they are large amounts or you receive them as part of a business-like activity or in relation to your income-earning activities as an employee or contractor)"
So large amount gifts are taxable?
Simple document with 2 witnesses stating the gift / intention. Anyone can sign but best to get a solicitor draft and sign this, and have them file a copy on site. (ie in case your house burns down)
if your parents ever went bankrupt or claimed you were holding property in resulting trust for them, this would be used but not 100% to stop the creditors / them taking this back, so its good to have anyway. However there is a presumption of advancement between parents and children i believe and this would be the starting point and need to be rebutted in a court case.
Order of events doesn't matter as long as they are close enough ie within same month as the intention needs to be demonstrable at the time of the transfer not the intention years later.
Why do you actually need one? who is requesting it
I was worried about ATO asking for this later on because they want to tax me on my gift
Don't think is a problem, money already had tax paid on it, its not income either. Your parents have to pay tax on it if it is income though
But if it makes you feel better it won't hurt.
Recommended for large gifts to have a deed at the time of the gift. It is not necessary or compulsory, but it can help demonstrate that it was indeed a gift at that time for whatever purposes including taxation, social security, anti money laundering, family law.
For example, say in 1 year time the person giving the gift goes into bankruptcy, if you have a deed from 1 year back showing it was a genuine gift (as opposed to given to you to 'hold') it could protect it from being taken away by the creditors.
ATO website says "rewards or small gifts such as cash birthday presents (however, gifts may be taxable if they are large amounts or you receive them as part of a business-like activity or in relation to your income-earning activities as an employee or contractor)"
So large amount gifts are taxable?
ATO website says "rewards or small gifts such as cash birthday presents (however, gifts may be taxable if they are large amounts or you receive them as part of a business-like activity or in relation to your income-earning activities as an employee or contractor)"
So large amount gifts are taxable?
dont See how the ato can tax a gift but who knows
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