ATO ID 2002/336: Assessability of payments received by carer - payments made by insurance company
Date of decision: 17 October 2001
Business line: Small Business/Individual Taxpayers

Issue
Are the payments received by the taxpayer from an insurance company for taking care of their spouse, assessable income under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
Yes. The payments received are assessable income under subsection 6-5(2) of the ITAA 1997 because the payments received are for services rendered.

Facts
The taxpayer's spouse suffered injuries at work and requires the services of a home based carer on a full time basis. The insurance company have agreed to accept the taxpayer as the spouse's carer. The taxpayer will undertake weekly carer's duties and will be paid at an hourly rate. Payments to the taxpayer are made under the appropriate section in the worker's compensation legislation.

Reasons for decision
Summary: Subsection 6-5(2) of the ITAA 1997 provides that assessable income includes income according to ordinary concepts, known as ordinary income. Ordinary income has generally been held to include three categories, namely, income from rendering personal service, income from property and income from carrying on a business. In this instance, the taxpayer is paid by an insurance company to provide home care to an incapacitated spouse. As the amounts received are payments received for personal services rendered they are income according to ordinary concepts. The income will be assessable income under subsection 6-5(2) of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1997 subsection 6-5(2)
Subject references: Carer payments