Published Date: 11 Mar 2024
This article examines the classification of gifts within the “assessable income” definition under s 6-5 of the Income Tax Assessment Act 1997 (Cth), highlighting the challenges in aligning gift taxation with ordinary income due to the inherent diversity of gifts and the contexts of their receipt. The article scrutinises the enduring conundrum that gifts pose in tax law, given their divergence from typical income streams such as wages, bonuses and tips. The analysis extends to critique the current gift taxation rules measuring it against Hill J’s embodiment of Adam Smith’s taxation virtues of fairness, simplicity and efficiency. Conclusively, the article proposes a reformed approach to reconcile the taxation of gifts with the ideals of equity, simplicity and efficiency in the tax system, thereby contributing to the broader conversation on refining Australia’s income tax structure.
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