Gifting means to give away something without gaining any benefit. In many ways, it’s similar to a transaction without an exchange. The most common kind of gifting (called gift inter vivos) involves:
- an intention to give;
- an intention to accept; and
- showing intention by some form of action.
Because many different laws take effect in this area, determining whether something’s a gift is tricky. Seek out a commercial property lawyer for advice.
Rowland v Stevenson (2005)
In this case, a man’s father-in-law handed over the keys to a yacht and said ‘you can have the boat’. In the son’s speech, he thanked him for the yacht. The father-in-law later claimed he didn’t mean to give the yacht; the speech was ‘in jest’. The Court found that this was a valid gift. The father-in-law showed intention by his words and verbal acceptance by the son. The handing over of the keys was the act that ensured the gift was legally binding.
Whether something can be gifted also depends on what it is.
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What Is a Valid Gift?
For something to be a gift it must be:
- money or a kind of personal property;
- voluntarily given;
- unconditional – nothing’s expected in return; and
- charitable – nothing is gained from giving a gift.
A promise to give something that you don’t have or that doesn’t exist won’t count as a gift.
Papathanasopoulos v Vacopoulos [2007]
When a couple broke off their engagement, Ms P tried to give the ring back but Mr V told her to keep it as a gift. Instead, the ring was thrown away. Even though the ring was personal property and voluntarily given and accepted, an engagement ring is not a gift because it’s conditional on a marriage taking place.
How Can a Gift Be Tax Deductible?
To deduct gifting expenses under the Income Tax Assessment Act and Regulations, the gift must:
- be given to a deductible gift recipient (DGR) in Australia;
- be worth $2 or more;
- not be given by will or in trust; and
- if it’s not money, have been purchased up to twelve months before being gifted.
But take care not to go over the allowable gifting amounts.
When Is It Appropriate to Give a Gift?
Gifting may not be proper in certain circumstances, such as where there may be a breach of anti-bribery and corruption regulation or a conflict of interest. Some examples of generally acceptable gifting include gifts that are:
- inexpensive;
- perishable;
- meals where both parties have members present;
- under legal and company gift limits; or
- approved by a supervisor.
Moreover, people in certain positions cannot accept gifts such as government officials or employees in some instances. The rule is not to give a gift to someone who must be free of influence or bias.
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