Tax rule - Gift from Family living outside Australia

Hi, everyone

I am going to get gift for my kids from their grandparents who leaves overseas.

My children are Australian citizen under age of 16 so I will be receiving gift from the grandparents as cash in my Australian bank account (roughly $10,000 AUD) .. so what are the tax implications and how can we avoid tax on this cash gift? Any declaration required for the transfer as gift as my bank account has my TFN number and last thing I want is ATO to query my foreign sources of income. .. !

Also I will receive in future some inheritance money distributed to me, my partner and children which will be around 50k to 100k...are this going to be taxed and how do we declare this as inheritance payment once received in Australia bank account?

 

gifts aren't taxed
Tax Tip 57: Gift Tax Tax Tip 57: Gift Tax

 

The worst case scenrio is Austrak or the ATO asking about the nature of the money received. The source of where it originated can be enquired but it wont have tax issues. Inheritance = foreign will ? I had a client send them a will from India once when a query about source came up. No drama.

 

Thanks, I have two separate things will is easy to solved as you mentioned but more issue is around lump-sum given by grand parents to my children obviously happy to receive them as my gift but how to prove that to ATO that it is gift?

 

Also lucky you talked about India as I have life insurance in India which was bought by my parents and they are paying premium even today but policy is on my name so when it matures then money will be given to me ( indian insurance companies give money back to client if insurance event is not triggered during term of policy) so obviously if my parents are around then they will use it but if they're not around then how will I get that fund as gift from them even though money was issued to my name by insurance company? Same for my children they also have Policy in India.

 

If it is not a gift what could it be. It could potentially be income disguised as a gift, but why would the ATO think that? Are there trusts set up in tax havens? Criminal links?

You would only have to prove it if challenged. If challenged then you could come up with declarations from the recipient and the giver. The gift give could back up the origin of the money too.

 

Well there is nothing like criminal setup but issue is that over the years when I was young my parents invested money on name of myself and my siblings so if and when it matures it will be in my name going into my overseas account so technically one can claim as my income or return on investment as I explained above for insurance money but in reality all premium paid by my parents and they got it tax deduction on their income so practically it is theirs if matured if they are around but if they are not then there will be issues for me to prove that as gift or inheritance..? The irony is that they invested on my children name as well which will be bigger issue as my children are au Australian citizen and maturity will be another 20 to 30 years..!

Indian insurance provide return of around 7% to 9% and also covers for life risk. We used to have similar insurance in Australia until 1980 if I am not wrong but then it was abandoned for what we have today...!

 

In that case it is not a gift