ATO Interpretative Decision

ATO ID 2001/18

Income Tax

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Whether the taxpayer is entitled to a sole parent rebate under section 159K of the Income Tax Assessment Act 1936 for periods during which the taxpayer had access to the taxpayer's children.

Decision

The taxpayer is not entitled to a sole parent rebate under section 159K of the Income Tax Assessment Act 1936 for the periods the taxpayer had access to the taxpayer's children.

(Note: the sole parent rebate is not available for assessments for the 2000-01 and later income years: section 159K(1A))

Facts

The taxpayer is divorced and has children from a previous marriage. During the relevant year, the taxpayer's former spouse has custody of the children and the taxpayer has access to the children for regular periods of time at weekends totalling 87 days and 41 other occasions for a period of four hours on each occasion

Reasons For Decision

The taxpayer does not satisfy the requirements of section 159K of the Income Tax Assessment Act 1936, and is not entitled to any sole parent rebate for the relevant year.

Although the taxpayer has had access for long periods on several occasions, on the whole the taxpayers access is typified by overnight visits which do not qualify as significant periodic access in accordance with the provisions of Taxation Ruling IT 254.

Subsection 159K(2) of the Income Tax Assessment Act 1936 outlines the circumstances in which a taxpayer, having sole care of dependants for only part of the year, is entitled to a rebate of tax. Taxation Ruling IT 254 specifically states that the sole parent rebate 'is not to apply where the access is of an insignificant nature'. It cites two to three days per week as an example of significant periodic access.

The requirements for claiming the sole parent rebate for the whole year under section 159K of the Income Tax Assessment Act 1936 are set out in Taxation Ruling IT 2337. The Ruling provides that the rebate is allowable where a taxpayer has the sole care of a dependant, being a child under 16 or a full time student under 25; the taxpayer was entitled to a concessional rebate for the dependant had the concessional rebates for dependants not been withdrawn; and, the taxpayer is not entitled to a concessional rebate for a daughter-housekeeper or a housekeeper.

With respect to sole care, in Case M78, the Board distinguished sole care, which it held to relate to ultimate and exclusive responsibility for providing care to the child, from the degree of care due from those by whom care is given on a temporary basis. As such, notwithstanding the lengthy periods the taxpayer has access to the children (amounting to 24% of the relevant year), the taxpayer's former spouse was alone in having 'sole care' of the children. There is no doubt that the taxpayer would have had a high degree of care for the children on a temporary basis during the periods the taxpayer had access to the children, but this is not equivalent to 'sole care'.

This is consistent with Case T45, in which the divorced taxpayer had custody of her child with her ex-husband having liberal rights of access. He looked after the child for about 40% of the time, expended money on the child and paid maintenance for the child. The Commissioner allowed part of the maximum sole parent rebate to both the taxpayer and her former husband. The taxpayer objected, claiming that she was entitled to the full rebate. It was ultimately held by the Board that only the taxpayer qualified for the rebate.

Legislative References:
Income Tax Assessment Act 1936
   section 159K

Case References:
Case M78
   80 ATC 549

Related Public Rulings (including Determinations)
IT 254
IT 2337

Keywords
Sole parent rebates

Business Line:  Small Business/Individual Taxpayers

Date of publication:  4 June 2001

ISSN: 1445-2782