Private ruling: tax offset
Published: May 2014
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a dependent tax offset? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1936 Section 159J | Income Tax Assessment Act 1997 Section 61-10

Reasons for decision: Summary: Dependent relative tax offset Section 159J of the Income Tax Assessment Act 1936 (ITAA 1936) provides that if a taxpayer contributes to the maintenance of certain persons who are a resident of Australia during an income year, the taxpayer may be entitled to a tax offset. The dependent tax offsets available under section 159J of the ITAA 1936 are for a: • spouse, • child-housekeeper, • invalid relative, or • parent of the taxpayer or parent of the taxpayer's spouse. In your case the person you are maintaining is not a dependent spouse, invalid relative or parent. A 'child-housekeeper' is defined in subsection 159J(6) of the ITAA 1936 as being a child of the taxpayer who is wholly engaged in keeping house for the taxpayer. Subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) defines the child of a person as including the persons adopted child, step-child or ex-nuptial child. The person you support is not your child. You are therefore not maintaining a dependant child-housekeeper. As entity A does not fall into any of the above categories as a dependant, you are not considered to be maintaining a dependant under section 159J of the ITAA 1936 and therefore you are not entitled to a dependent tax offset. Although you help pay for entity A's living, medical and educational costs, as they are not regarded as your dependant under the tax legislation, you are not entitled to a tax offset in relation to the support you provide. Dependent (invalid and carer) tax offset As part of the 2012-13 budget, the government announced the consolidation of eight dependency tax offsets into a single, streamlined and non-refundable tax offset from 1 July 2012. The tax offsets consolidated were: • Invalid spouse tax offset • Carer spouse tax offset • Housekeeper tax offset • Housekeeper (with child) tax offset • Child-housekeeper tax offset • Child-housekeeper (with child) tax offset • Invalid relative tax offset • Parent/parent-in-law tax offsets. The new Dependant (invalid and carer) tax offset will only be available to taxpayers who maintain a dependant who is genuinely unable to work due to invalidity or carer obligations. Under section 61-10 of the ITAA 1997, certain taxpayers are entitled to a dependent (invalid and carer) tax offset. A person may be entitled to a tax offset if they maintained certain individuals during the income year and the individual was receiving (a) a disability support pension or a special needs disability support pension under the Social Security Act 1991 ; or (b) an invalidity service pension under the Veterans' Entitlements Act 1986 . In your circumstances, entity A is not an invalid and does not receive a disability support pension or invalidity service pension. Therefore you are not entitled to a dependent (invalid and carer) tax offset.

Relevant facts: You provide financial support to entity A. | Entity A was born in Australia. When entity A was young, one of A's parents left Australia and has not returned or maintained contact or provided support to entity A or the other parent. | Entity A's relation is a friend of yours. Entity A and a relation are alone in Australia. The relations of the family are overseas. | You decided to offer support. You spend time with the family each week and provide financial support for entity A's education, clothing, dental and medical costs. | You have opened an account for entity A. | The funds are available for entity A's long term needs. You continue to provide money for immediate needs. | You have no relationship other than being a friend with entity A or their family members. | In the 2011-12 and 2012-13 financial years you claimed a dependent tax offset in relation to entity A.