If a family member overseas is planning to send you money, there is a Full Federal Court decision you should read about first.

Rene Cheung retired to Australia from Vanuatu in 2000. Over the next decade his older sister, Graziella Leong, the owner of a large Vanuatu supermarket chain transferred him more than $30 million across 99 separate deposits. Rene said they were gifts. He declared the interest he earned on the money, but not the money itself.

The ATO disagreed and assessed the entire amount as income. Rene objected, lost at the Tribunal, and appealed to the Federal Court. In November 2024 he won. Justice Logan heard Mrs Leong give evidence, described her as a most impressive witness, and accepted the transfers were exactly what the family said they were gifts of capital between siblings, made out of loyalty and a long family tradition of pooling money.

That should have been the end of it. It was not.

The Commissioner appealed, and in May 2026 the Full Federal Court overturned the decision. The Full Court found that the documentary evidence and the inconsistencies in the family’s accounts had not been properly weighed. Rene had not discharged his onus of proving the assessments were excessive. The assessments were restored, and more than a decade of transfers became taxable income.

Honest witnesses and a genuine family relationship were not enough. In a tax dispute, the burden of proof sits with you the ATO does not have to prove where the money came from. You have to prove it was not income.

What to Do Before the Money Arrives

The ATO has published guidance on documenting genuine gifts from overseas. Its position is that a genuine gift is one where the documentation supports the characterisation, the parties’ behaviour is consistent with it, and the money comes from funds genuinely independent of you.

Practically, that means gathering the following at the time not years later when a review lands:

• A deed of gift, prepared and signed by the donor before or when the money is sent
• Formal identification of the donor passport or national identity card
• The donor’s bank statements showing both the transfer and their wealth before they made it, so their capacity to give is evident
• Any declaration the donor has made in their own country about the transfer
• For an inheritance, a certified copy of the will or the estate’s distribution statement
• Records tracing the money from the donor’s account into yours, with no unexplained stops in between

Keep all of it. The ATO can review these transfers many years after the event, and every transfer over $10,000 into Australia is already reported to AUSTRAC. The paperwork is the cheap part; reconstructing the story a decade later is not.

If family overseas is planning to send you money as a gift, an inheritance, a loan, or help with a house deposit, contact us before the transfer. A short conversation and a properly executed deed of gift can save an argument worth more than the gift itself. Do not leave it until the money has arrived.

t: +61 7 3177 4120
e: advisors@hksrussell.com

Posted on August 12, 2026 by Charisse Russell - Articles