Private ruling: Maintenance allowance
Published: December 2014
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014
Date scheme commenced: 1 July 2012

Ruling: Q1: Are the maintenance payments you receive assessable income? | A1: No.

Relevant facts and circumstances: You have custody and care of a child who is related to you. The government department in your State that is responsible for child protection placed the child in your care as the child was unable to be cared for by their parents. In order to assist with the costs of maintaining the child, the government department pays you a fortnightly maintenance allowance. The allowance is only for the costs of maintaining the child and there is no element that is a payment for your time or a reward for services.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 6-10

Reasons for decision: Summary: Section 6-5 and section 6-10 of the Income Tax Assessment Act 1997 provides that the assessable income of a resident taxpayer includes ordinary and statutory income derived directly and indirectly from all sources during the income year. In determining if an amount is income according to ordinary concepts, consideration must be given to whether the amount is the product of any income producing activity. Such an activity could include employment, carrying on a business or rendering a service. Also, statutory income includes allowances, gratuities, compensations, benefits, bonuses and premiums paid in respect of or in relation to employment or services rendered by a person. In Taxation Determination TD 2006/62 Income tax: are certain payments to a volunteer foster carer to provide foster care assessable income? , the Commissioner notes that certain payments made to volunteers to allow for their provision of foster care would not amount to assessable income. Such payments would include 'standard or basic foster care subsidies plus additional loadings or allowances' in relation to payments 'made to help meet the costs associated with providing care for foster children'. TD 2006/62 does not apply to payments made to employees of foster care agencies. In your case the payment is made to you in recognition of the care you give the child placed in your custody. It is paid to assist you with the costs associated with that care. Therefore, the payment you receive is not assessable income and is not required to be declared in your income tax return and no deductions are allowable.