If a family member overseas is planning to send you money, whether as a gift, inheritance, loan or financial support, a recent court
decision provides an important reminder about the value of proper documentation.
The case involved Rene Cheung, who retired to Australia from Vanuatu in 2000. Over the following decade, his sister, Graziella Leong,
transferred more than $30 million to him across 99 separate deposits. Mr Cheung maintained the transfers were gifts from his sister and
declared the interest he earned on the funds, but not the money itself.
The ATO took a different view and treated the transfers as taxable income. After challenging the assessment, Mr Cheung initially succeeded
in the Federal Court in late 2024. The Court accepted evidence that the transfers were genuine gifts between siblings and reflected a
longstanding family practice of sharing wealth.
However, the matter didn't end there.
In May 2026, the Full Federal Court overturned the earlier decision. The Court found that the documentary evidence and inconsistencies in
the family's accounts had not been adequately considered. Ultimately, Mr Cheung was unable to establish that the assessments were
excessive, and the ATO's position prevailed.
The outcome highlights an important lesson for anyone receiving significant funds from overseas. Even where a gift is genuine and comes
from a close family member, supporting evidence can be critical.
In a tax dispute, the burden of proof generally rests with the taxpayer. The ATO does not necessarily need to prove where the money came
from. Instead, you may need to demonstrate that the funds were not income and support that position with appropriate documentation.
If family overseas is planning to send you money, whether it's a gift, inheritance, loan or assistance with a property
purchase, it's worth seeking advice before the transfer takes place. The right documentation upfront can provide clarity, reduce risk and
help ensure your intentions are properly supported should questions ever arise.
The right documentation before money changes hands can help avoid costly complications down the track.
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