1011518465467 | Legal database

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Edited version of private ruling

Authorisation Number: 1011518465467

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Ruling

Subject: Education tax refund

Question:

Can you claim up to the maximum education tax refund (ETR) even if you do not have full care of your children?

Answer:

No.

This ruling applies for the following periods:

Year ended 30 June 2009

Year ended 30 June 2010

The scheme commenced on:

1 July 2008

Relevant facts and circumstances

You have children attending primary school and children attending secondary school.

You bought computer equipment for your children.

You receive Family Tax Benefit (FTB) Part A payment.

You have a 50% FTB shared-care arrangement with your ex-partner.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subdivision 61-M,

Income Tax Assessment Act 1997 Section 61-610,

Income Tax Assessment Act 1997 Section 61-670 and

Social Security Act 1991 Section 4.

Reasons for decision

Summary

You are unable to claim up to the maximum education tax refund (ETR) as you have a Family Tax Benefit (FTB) shared-care percentage that needs to be applied in working out your claim for each child.

Detailed reasoning

Subdivision 61-M of the Income Tax Assessment Act 1997 (ITAA 1997) introduces a refundable tax offset for eligible education expenses, ETR. The 50 per cent offset applies to eligible expenditure of up to a maximum of $750 for children undertaking primary studies and $1,500 for children undertaking secondary studies in the 2008-09 income year and up to a maximum of $780 and $1,558 respectively in the 2009-10 income year.

Section 61-610 of the ITAA 1997 sets out three tests before an individual can claim the ETR. These are the eligible individual test, the schooling requirement test and the educational expenses test.

Generally, an individual must be entitled to receive Family Tax Benefit Part A payment for a child enrolled or registered in a primary or secondary school studies. The educational expenses test provides a list of items that support a child's primary or secondary education. This includes the cost of acquiring a computer.

In your case, you satisfy the eligibility requirements as you meet all the three tests set out in section 61-610 of the ITAA 1997.

However, how much ETR you can claim will depend on whether you have full care of your children. Section 61-670 of the ITAA 1997 provides a special rule for calculating the offset limit in situations where a person satisfies the eligible individual test, but has a shared-care arrangement in relation to the child. In these cases, the offset limit is apportioned according to the degree of shared-care or, in certain cases as agreed between the partners. An agreement between partners only applies if the partners are members of a couple. Section 4 of the Social Security Act 1991 provides that a partner is a member of a couple if the person is legally married to another person and not living separately on a permanent basis or if not legally married, the persons live in a marriage-like relationship.

In your case, you are not a member of a couple as you are separated from your ex-partner. Consequently, an agreed percentage between partners is not applicable and is not required in working out your claim. However, your FTB shared-care arrangement of 50% with your ex-partner will be applied to the maximum offset limit for each child. For example, in the 2008-09 income year, you can claim a refund up to 50% x ($750 x 50%) for each child attending primary studies and 50% x ($1,500 x 50%) for each child attending secondary studies.

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