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ATO Interpretative Decision

ATO ID 2002/336

Income Tax

Assessability of payments received by carer - payments made by insurance company
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Are the payments received by the taxpayer from an insurance company for taking care of the their spouse, assessable income under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. The payments received are assessable income under subsection 6-5(2) of the ITAA 1997 because the payments received are for services rendered.

Facts

The taxpayer's spouse suffered injuries at work and requires the services of a home based carer on a full time basis. The insurance company have agreed to accept the taxpayer as the spouse's carer. The taxpayer will undertake weekly carer's duties and will be paid at an hourly rate. Payments to the taxpayer are made under the appropriate section in the worker's compensation legislation.

Reasons for Decision

Subsection 6-5(2) of the ITAA 1997 provides that assessable income includes income according to ordinary concepts, known as ordinary income.

Ordinary income has generally been held to include three categories, namely, income from rendering personal service, income from property and income from carrying on a business. In this instance, the taxpayer is paid by an insurance company to provide home care to an incapacitated spouse.

As the amounts received are payments received for personal services rendered they are income according to ordinary concepts. The income will be assessable income under subsection 6-5(2) of the ITAA 1997.

Note: The taxpayer may be entitled to claim losses and outgoings to the extent to which they are incurred in gaining or producing assessable income as a carer except where the outgoings are of a capital, private or domestic nature.

Date of decision:  17 October 2001

Legislative References:
Income Tax Assessment Act 1997
   subsection 6-5(2)

Keywords
Carer payments

Siebel/TDMS Reference Number:  DW305032

Business Line:  Small Business/Individual Taxpayers

Date of publication:  28 March 2002

ISSN: 1445-2782

history
  Date: Version:
You are here 17 October 2001 Original statement
  4 April 2014 Updated statement

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