Genuine gifts or loans received from related overseas entities (including family members and friends) are sometimes used to fund businesses or to acquire income producing assets.
In this context, a genuine gift or loan is one where:
- the characterisation of the transaction as a gift or loan is supported by appropriate documentation;
- the parties’ behaviour is consistent with that characterisation; and
- the monies provided are sourced from funds genuinely independent of the taxpayer.
The ATO has published detailed information to help taxpayers properly document genuine gifts or loans received from related overseas entities that are used for income purposes.
The information can be accessed from the ATO website by searching for ‘Gifts or loan from related overseas entities’