Edited version of private ruling

Authorisation Number: 1011819476339

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Ruling

Subject: Dependent Spouse Tax Offset

Question

Are you eligible to claim a partial dependent spouse tax offset for the period you maintained your de-facto?

Answer: Yes.

Relevant facts and circumstances

You were in a de-facto relationship.

Neither you nor your former de-facto were eligible to receive Family tax benefit part B for any of the 2010 income year.

You and your former de-facto spouse were both residents for tax purposes for the full 2010 income year.

Your adjusted taxable income for the 2010 income year was less than $150,000.

You supported your former de-facto spouse whilst they were unemployed until they gained employment part way through the 2010 income year.

For the period 1 July 2009 until they gained employment, your former de-facto did not earn any income.

Your former de-facto spouse moved out of your former joint home to take up their employment position in another city. They have not returned and still live in the other city.

You did/do not hold any joint assets or liabilities with your former de-facto spouse - this includes bank accounts, loans, property etc.

You did/do not hold any joint insurance premiums, including private health insurance, with your former de-facto.

From the date they gained employment and moved out, you have not contributed to the maintenance of your former de-facto.

Reasons for decision

Summary

As you maintained your former de-facto for part of the 2010 income year and they did not earn any income during this period, you are entitled to a partial spouse tax offset for that part of the year.

Detailed reasoning

A resident taxpayer who, during a year of income, contributes to the maintenance of a dependant who is an Australian resident is entitled to a tax offset in accordance with section 159J of the Income Tax Assessment Act 1936 (ITAA 1936) (subsection 159J(1) of the ITAA 1936).

A dependant includes a taxpayer's spouse (subsection 159J(2) of the ITAA 1936).

A taxpayer is eligible to claim a dependent spouse tax offset for any period in 2009-10 that they had a spouse and met all following conditions:

· the taxpayer maintained their spouse.

· the spouse was a resident.

· the taxpayer was a resident at any time in 2009-10.

· neither the spouse (if they were the taxpayer's spouse during that period) nor the taxpayer were entitled to FTB Part B or were only entitled to it at the shared-care rate.

· the taxpayer had adjusted taxable income less than $150,000

· the spouse has adjusted taxable income less than $9,254.

A partial dependent spouse tax offset may be allowed in certain circumstances, including where a taxpayer contributes to the maintenance of their spouse during only part of the year (subsection 159J(3) of the ITAA 1936).

The amount of the dependent spouse tax offset otherwise allowable is reduced by $1 for every $4 by which the spouse's adjusted taxable income (ATI) exceeds $282 (subsection 159J(4) of the ITAA 1936). The maximum spouse tax offset for the 2009-10 income year is $2243. Therefore, the spouse tax offset cuts out when the spouse's ATI is $9,254 or more.

Where a taxpayer and their spouse reside together for the whole or part of the year of income the taxpayer is regarded, unless the contrary is established to the satisfaction of the Commissioner, as having contributed to the maintenance of their spouse for the whole or that part of the year (subsection 159J(5) of the ITAA 1936).

It is open to persons living together to prove that they have not contributed to the maintenance of each other by providing evidence establishing beyond doubt that each was self-supporting. Generally, the starting point in such an exercise would be a detailed record of actual household expenses and the amounts contributed by each person. Normal domestic sharing arrangements, for example, a common account to which each person contributes and which is used to meet joint expenses, is not ordinarily sufficient to establish that one person has not contributed to the maintenance of the other.

A taxpayer may also contribute to the maintenance of a dependant when the taxpayer and the dependant do not live in the same house. The Commissioner considers a taxpayer to have maintained a dependant if the taxpayer gave the dependant food, clothing and lodging, or helped them to pay for their living, medical and educational costs.

Where a taxpayer has a spouse for the whole income year, and the spouse worked at any time during the income year, the taxpayer is still considered to have maintained their spouse - as a dependant - for the whole income year. A taxpayer will also be considered to have maintained their spouse even if the taxpayer and the spouse were temporarily separated. Similar to that mentioned above in respect to a taxpayer and their spouse living together, where this is not the case or they are separated temporarily, they may be able to prove that they have not contributed to the maintenance of each other by providing evidence establishing beyond doubt that each was self-supporting.

In your case, you lived in the same house with your former de-facto until they gained employment. For the remainder of the income year your former de-facto lived and worked in another city and you contend that during this period you did not contribute to their maintenance as you were each fully self-supported. This is further supported by the facts that you did not hold any joint assets, for example property or bank accounts. You did not have any joint liabilities or insurance premiums that you both contributed to, for example, loans or private health insurance policies.

The financial affairs of you and your former de-facto are separated to such a degree that based on the information provided, it is possible to separate the expenses covered between you both to determine who paid for what expenses. You had a de-facto for part of the income year but you have been separated from your spouse indefinitely since they gained employment and moved to another city. As such, the Commissioner considers that you and your spouse did not each contribute to the maintenance of the other after the date of separation.

Neither yourself nor your former de-facto were eligible for family tax benefit B. Your adjusted taxable income was less than $150K. Your spouse's ATI for the period you were maintaining them was less than $9,254.

Therefore, subsection 159J(3) of the ITAA 1936 which allows a partial dependent spouse tax offset where a taxpayer contributes to the maintenance of their spouse during part of the year only will apply to your situation.

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