If my mom sends me 20,000 dollars every year and I put them in my bank and pay interst tax, can I say the 20,000 dollars my annual income? If not, what is taxable income include?
Hello and thanks for your question.
Taxable income generally means income derived through labour or from a profitable enterprise or investment. The tax laws include somewhat more complex and specific definitions of what constitutes income, but the above description should give a sense of what income is.
However, gifts are generally not regarded as income and are not taxable under current Australian Law.
However, if an amount is paid regularly the ATO will sometimes treat it as income in which case it may become taxable. To avoid this it may be better if your mother varies the amount she gives you from year to year.
Also be aware that money which you may regard as a gift, can still be held to be income at law if it is traceable or arises out of work, benefits or items of value supplied to the payer. So if you regularly do work for your mother which might justify the payments, then it is possible the ATO could form the view that such payments were income.
I trust the above assists your understanding.
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Dip Law LPAB - Sydney based lawyer
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