ATO Interpretative Decision
ATO ID 2002/306
Income Tax
Dependant Spouse Tax Offset - spouse living overseasFOI status: may be released
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Status of this decision: Decision Current
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the taxpayer entitled to a dependant spouse tax offset under section 159J of the Income Tax Assessment Act 1936 (ITAA 1936) where the spouse does not live in Australia?
Decision
Yes. The taxpayer is entitled to a dependant spouse tax offset under section 159J of the ITAA 1936 where the spouse does not live in Australia as a result of the operation of subsection 159J(3A) of the ITAA 1936.
Facts
The taxpayer came to Australia as a refugee and is now a resident for tax purposes.
The taxpayer's spouse was unable to accompany the taxpayer at that time. They have however now sought to immigrate to Australia. Their application has not yet been finalised.
The application for the spouse's immigration was made within 6 months of the taxpayer's arrival in Australia and has been outstanding for 12 months.
The taxpayer has been sending money to their spouse who is dependant on the taxpayer for financial support.
Reasons for Decision
Subsection 159J(1) of the 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 dependant spouse who is a 'resident of Australia'.
A 'resident of Australia' is defined in subsection 6(1) of the ITAA 1936. However 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' 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.
Where a person's domicile is in Australia, it is necessary to then consider whether or not the person has a permanent place of abode outside of Australia.
The leading case on permanent place of abode is Applegate v. FC of T 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 of the physical surroundings in which a person lives.
While the taxpayer's spouse is currently living overseas and therefore their current 'place of abode' is overseas this is only a temporary arrangement. The spouse intends to follow the taxpayer to Australia as soon as possible. They have taken timely and appropriate steps to immigrate as soon as possible. The Commissioner accepts that the taxpayer's spouse does not have a permanent place of abode outside of Australia.
As the taxpayer's spouse is deemed to be domiciled in Australia and does not have a permanent place of abode outside of Australia they are a resident under the definition under subsection 6(1) of the ITAA 1936. Therefore the taxpayer has a resident dependant and is entitled to a dependant spouse tax offset under section 159J of the ITAA 1936.
Date of decision: 12 June 2001Year of income: Year ended 30 June 2000
Legislative References:
Income Tax Assessment Act 1936
subsection 6(1)
section 159J
subsection 159J(3A)
Case References:
Applegate v. FC of T
79 ATC 4307
Related Public Rulings (including Determinations)
IT 2650
ATO ID 2001/423
Keywords
Domicile tests
Non resident individuals
Spouse rebates
Dependent spouse
Spouse
Rebates
ISSN: 1445-2782
| Date: | Version: | |
| You are here → | 12 June 2001 | Original statement |
| 27 June 2014 | Updated statement | |
| 24 March 2017 | Archived |