Private ruling: dependent spouse tax offset
Published: November 2011
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a dependent spouse tax offset? | A1: 

Relevant facts and circumstances: You are married and have two children. You are earning all your income in Australia and paying tax on the income. Your spouse and children remain overseas, living with family. You have been sending money to your spouse who is dependent on you for financial support. You applied for permanent residency for you and your family two years ago and are still awaiting a reply.

Relevant legislative provisions: Income Tax Assessment Act 1936 Subsection 6(1) | Income Tax Assessment Act 1936 Section 159J | Income Tax Assessment Act 1936 Subsection 159J(3A)

Reasons for decision: Summary: Section 159J of the Income Tax Assessment Act 1936 (ITAA 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'. A 'resident of Australia' is defined in subsection 6(1) of the ITAA 1936. Subsection 159J(3A) of the ITAA 1936 provides that, in applying the definition of resident in subsection 6(1) of the ITAA 1936, for the purposes of the dependant spouse tax offset the dependant spouse of a taxpayer will be taken to have the same domicile as the taxpayer. The taxpayer's spouse is therefore, deemed to have a domicile in Australia for the purposes of the definition of resident in subsection 6(1) of the ITAA 1936. Subsection 6(1) of the ITAA 1936 defines a resident to include a person whose domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside Australia. The leading case on permanent place of abode is Applegate v. Federal Commissioner of Taxation 79 ATC 4307; (1979) 9 ATR 899. The Federal Court stated that in respect of the definition of 'resident', a permanent place of abode does not have to be everlasting or forever but it is rather used in contrast to temporary or transitory. Taxation Ruling IT 2650 also considers residency and permanent place of abode outside Australia. Paragraph 12 of IT 2650 states that 'place of abode' refers to a person's residence, where one lives with one's family and sleeps at night. In essence, a person's 'place of abode' is that person's dwelling place or the physical surroundings in which a person lives. Where a taxpayer marries while overseas, the spouse is not considered to have a permanent place of abode outside Australia if the spouse has taken timely and appropriate steps to migrate to Australia. In your case, while your spouse is currently living overseas and their current 'place of abode' is overseas, this is only a temporary arrangement. Your spouse intends to join you in Australia when your migration application has been approved. You have applied for permanent residency in a timely and appropriate manner, the Commissioner accepts that your spouse does not have a permanent place of abode outside of Australia. As your spouse is deemed to have a domicile in Australia and does not have a permanent place of abode outside of Australia, your spouse is a resident as defined in subsection 6(1) of the ITAA 1936. Therefore, you have contributed to the maintenance of your resident spouse and you are entitled to a dependant tax offset under section 159J of the ITAA 1936.

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