Many parents want to help their kids out, whether it\u2019s by gifting cash to help with a home deposit or passing on assets like property or shares. But, while it may seem like a kind gesture, gifting comes with a surprising amount of tax complexity in Australia. If you\u2019re not careful, you could end up with a hefty tax bill or face legal issues you didn\u2019t expect. Here\u2019s what you need to know to avoid those nasty surprises.<\/p>\n\n\n\n
When you give cash, it seems pretty straightforward. The recipient doesn\u2019t have to pay tax on it\u2014great, right? Well, yes, but there\u2019s a catch for the giver. If you\u2019re withdrawing the money by selling an asset (like shares or property), that could trigger capital gains tax (CGT) for you. While the gift itself isn\u2019t taxed, converting assets to cash to make the gift can be. So, if you\u2019re thinking of withdrawing funds to give your child a generous gift, make sure you understand how your sale of assets could impact your tax obligations.<\/p>\n\n\n\n
For example, let\u2019s say you sell a property to raise money for a gift. If that property has increased in value since you bought it, you could face CGT based on the profit made from the sale, even though you didn\u2019t make any money from the gift itself. It\u2019s a simple gift, but one that\u2019s potentially more expensive than you thought, explains Yahoo Finance<\/a>.<\/p>\n\n\n\n