Private ruling: Assessability of compensation payments
Published: September 2012
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2011

Ruling: Question and answer: | Is the domestic assistance carer's payment that you receive assessable? | Yes.


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

Reasons for decision: Summary: Section 6-5 of the ITAA 1997 provides that the assessable income of a resident taxpayer includes income according to ordinary concepts, known as 'ordinary income', derived directly or indirectly from all sources during the income year. Ordinary income has generally been held to include three categories, namely, income from rendering personal services, income from property and income from carrying on a business. | Detailed Reasoning - Your circumstance: You are paid a periodic amount by an insurance company to provide home care to your incapacitated spouse. As these payments are being received for personal services rendered by you in providing care for your spouse they are income according to ordinary concepts. Accordingly, the payments that you receive are considered to be ordinary income and therefore assessable under section 6-5 of the ITAA 1997. | Detailed Reasoning - Deductions: A taxpayer may be entitled to claim losses and outgoings to the extent to which they are incurred in gaining or producing assessable income as a carer except where the outgoings are of a capital, private or domestic nature. For further information on deductions that you may be eligible to claim you can log onto www.ato.gov.au.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You are an Australian resident for tax purposes. | Your spouse was involved in a motor vehicle accident. | The accident rendered your spouse severely disabled. | After the accident your spouse requires 24 hour supervision. | As a result of the accident your spouse has been in receipt of periodic compensation payments from an insurance company. | Due to a change in policy the periodic payments made by the insurance company will now be paid directly to you via an ABN. | The periodic payments that are made are referred to by insurance company as a 'domestic assistance carer's payment'.