ATO Interpretative Decision

ATO ID 2001/628

Income Tax

Dependant Tax Offset - full time student grandchild
FOI status: may be released

This version is no longer current. Please follow this link to view the current version.


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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is the taxpayer entitled to a dependant tax offset under section 159J of the Income Tax Assessment Act 1936 (ITAA 1936) for maintaining a full time student grandchild?

Decision

No, the taxpayer is not entitled to a dependant tax offset under section 159J of the ITAA 1936 for maintaining a full time student grandchild?

Facts

The grandchild of the taxpayer and their spouse has lived with them for a number of years.

The parent of the grandchild is a drug addict and is supposed to be living with the taxpayer. However, due to the nature of the parent's addiction, the taxpayer and their spouse never know where the parent is. The taxpayer has not sought custody of the grandchild as the parent has threatened to remove the grandchild from the family's care if they attempted to do so.

The taxpayer's grandchild is a full-time student under the age of 25.

The taxpayer has incurred costs for education and maintaining the grandchild.

Reasons for Decision

Section 159J of the ITAA 1936 provides that if a taxpayer contributes to the maintenance of a person who is a resident of Australia during an income year, the taxpayer may be entitled to a tax offset.

The dependant tax offsets available under section 159J of the ITAA 1936 are for a:

•
Spouse
•
Child-housekeeper
•
Invalid relative
•
Parent of the taxpayer or parent of the taxpayer's spouse

The taxpayer is not maintaining a dependant 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. The taxpayer's grandchild is not their child and as the grandchild is a full-time student cannot be 'wholly engaged' in keeping house for the taxpayer. The taxpayer is therefore not maintaining a dependant child-housekeeper.

The taxpayer is not considered to be maintaining a dependant under section 159J of the ITAA 1936 and is therefore not entitled to a tax offset.

Note: Section 159J of the ITAA 1936 formerly allowed a child less than 16 years of age (not being a student) rebate and a student rebate (rebates are now called tax offsets). However these rebates were abolished from 1 July 1976 (subsection 159J(1A) of the ITAA 1936). The child and student tax offsets are now only notionally retained for the purpose of determining entitlement to certain other tax offsets and Medicare Levy thresholds.

Date of decision:  16 October 2001

Year of income:  Year ended 30 June 2000 Year ended 30 June 2001 Year ending 30 June 2002

Legislative References:
Income Tax Assessment Act 1936
   section 159J
   subsection 159J(1A)
   subsection 159J(6)

Keywords
Dependant rebates
Rebates
Dependant students
Child housekeeper rebates

Business Line:  Small Business/Individual Taxpayers

Date of publication:  28 November 2001

ISSN: 1445-2782

history
  Date: Version:
You are here 16 October 2001 Original statement
  28 October 2005 Archived

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).