Private ruling: Spouse tax offset
Published: June 2012
Ruling period: Year ended 30 June 2003 | Year ended 30 June 2004 | Year ended 30 June 2005 | Year ended 30 June 2007 | Year ended 30 June 2008 | Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011
Date scheme commenced: 1 July 2002

Ruling: Q1: Are you entitled to a spouse tax offset for any financial year between 2002-03 and 2010-11? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 159J

Reasons for decision: Summary: Subsection 159J of the Income Tax Assessment Act 1936 provides that a taxpayer is entitled to a tax offset where, during the year of income, they contributed to the maintenance of a spouse who is a 'resident of Australia'. The maximum tax offset you can claim in the 2010-11 financial year is $2,286. However, you cannot claim a spouse tax offset in the 2010-11 financial year if your adjusted taxable income (ATI) is more than $150,000. Tax offsets directly reduce the amount of tax you must pay. They are not the same as tax deductions. Deductions only reduce your total assessable income dollar for dollar and your tax payable at most by your marginal tax rate. Each dollar of tax offset reduces your tax payable by a dollar regardless of your taxable income. In your case, you did not have a tax liability in most of the years to which the payment relates and you were not entitled to the spouse tax offset for the 2005-06 financial year. Therefore, you are not entitled to a tax offset in those years. Furthermore, you cannot claim a spouse tax offset in the 2010-11 financial year as your ATI was more than $150,000. While we recognise your specific circumstances, the legislation does not provide for a spouse tax offset to be claimed in the year when no income is declared, even if it is paid in a later year.

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. | You have a dependant spouse. | Your income was not taxable for the 2002-03 and 2006-07 financial years and you were not required to lodge a tax return for the 2003-04 and 2004-05 financial years and the 2006-07 to 2009-10 financial years. | You were not eligible for a spouse tax offset in the 2005-06 year because your spouse's separate net income precluded it. | You received a compensation payment in the 2010-11 financial year of more than $150,000 which included an amount for years back to 2002-03.