Private ruling: Assessability of income
Published: March 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2013

Ruling: Questions and answers | Are the fortnightly payments you receive in recognition of the care you provide a child assessable income? | No. | Are you entitled to deductions for food, telephone and car expenses? | No.

Relevant facts and circumstances: You receive a fortnightly payment in recognition of your care for a disabled child. This payment was taxed during the last financial year. You were paid a fortnightly amount along with super and you were issued with a payment summary. The taxation of the payment is your responsibility. You incur expenses in relation to the care of your child. You would like to claim a deduction for the above expenses in relation to the care of your child. You use your car in relation to the care of your child. There are no guidelines in relation to what the fortnightly payment is to be used for in relation to your child.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2) | Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a taxpayer includes income according to ordinary concepts. Ordinary income has generally been held to include 3 categories, namely, income from rendering personal services, income from property, and income from carrying on a business. Other characteristics of income that have evolved from case law included receipts that: · are earned · are expected · are relied upon, and · have an element of periodicity, recurrence or regularity. Taxation determination TD 2006/62 discusses payments made to foster carers. Although you are not a foster carer the principals associated with that care discussed in TD 2006/62 can be applied to your circumstances. TD 2006/62 states that payments received by a foster carer are not assessable where: · The payments are made to meet the costs associated with the care of a child · The carer is not employed by a care agency · The payments are not received as part of a business of providing foster care In your case the payment is made to you in recognition of the care you give a child. 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. | Detailed Reasoning - Deductions: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. As the payment you receive is not assessable income no deductions are available to you in relation to the care of a child. | Summary: 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.

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