Private ruling: Carer reimbursement payments
Published: April 2013
Ruling period: Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2012

Ruling: Q1: Are your carer reimbursement payments considered assessable income? | A1: No.

Relevant facts and circumstances: You provide full-time care to a person who suffers from a severe disability. They were relinquished by their biological parents following their birth and subject to a guardianship order and resided with you in a foster care arrangement. The guardianship order expired when they turned 18 years of age and they have remained in your care on a voluntary basis as an adult. They receive a funding package from an organisation for disability support. A portion of the package has been allocated as carer reimbursement payments. This amount is based on a published schedule for theses types of payments. You incur costs as part of your provision of care for the person. If approved by the organisation, you will receive a carer reimbursement payment on a monthly basis. You are not an employee of the organisation and you are not in the business of providing full-time or part time care.

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 (ITAA 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. Taxation Ruing IT 2639 describes income from personal services as 'income that an individual earns predominantly as a direct reward for his or her personal efforts by, for example, the provision of services, exercise of skills or the application of labour'. The receipt of payment as a reward for services (which would be considered assessable income) can be contrasted with the receipt of a payment to a volunteer to reimburse them for costs incurred by them in the carrying out of their activities. A payment to a volunteer for the reimbursement of expenses is not considered to be assessable income. Paragraph 8 of Taxation Determination TD 2004/75 provides the following example of a reimbursement: Peter provides volunteer respite care for a child with disabilities for one weekend (Friday evening to Monday morning) per month. Peter is paid an amount of $350 for the weekend by an organisation that arranges respite care for disabled persons. The payment is intended to cover expenses incurred in providing the respite care including food and drink, laundry, recreation activities and transport. The payment is considered to be in the nature of a reimbursement of expenses and therefore is not included in Peter's assessable income. Similarly in Taxation Determination TD 2006/62, 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. Based on the facts provided, we accept that you are not being paid for your personal services but are receiving monies from the disabled person with the intention that these be used to cover the costs you may incur in providing care. Such payments are not considered to be ordinary income or statutory income. Therefore, the payments do not form part of your assessable income and you are not required to include the amounts anywhere in your tax return.