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Edited version of your private ruling
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Ruling
Subject: Tax offset - dependent spouse
Question 1
Are you entitled to claim the dependent spouse tax offset?
Answer
Yes, if your income is below $150,000 and your spouse's adjusted taxable income (ATI) is less than $9,702.
Question 2
Are you required to include your spouse's allocated pension when calculating their ATI?
Answer
No.
This ruling applies for the following period:
Year ended 30 June 2012
The scheme commences on:
1 July 2011
Relevant facts and circumstances
Your spouse is retired.
Your spouse received some income during the financial year.
During this financial year your spouse also received an allocated pension from a superannuation fund.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 159J
Income Tax Assessment Act 1936 subsection 159J(4)
Reasons for decision
Section 159J of the Income Tax Assessment Act 1936 (ITAA 1936) provides that a taxpayer may be entitled to a tax offset where, during the year of income, they contribute to the maintenance of a dependant who is a resident of Australia.
Where a person is entitled to a dependent spouse tax offset, that tax offset may be reduced in part or in full by the dependant's ATI.
Subsection 159J(4) of the ITAA 1936 provides for the amount of the tax offset otherwise allowable to be reduced by $1 for every $4 by which the ATI derived by the dependant in the year of income exceeds $282.
An individual's ATI for a particular year is the sum of the following amounts:
· the individual's taxable income,
· the individual's adjusted fringe benefits amount,
· the individual's tax-free government pensions or benefits; however do not include any superannuation benefits (income streams or lump sums),
· the individual's target foreign income (includes any income earned from overseas that is not already included in your taxable income or received in the form of a fringe benefit),
· reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions),
· total net investment loss (includes both net financial investment loss and net rental property loss),
· less the individual's deductible child maintenance expenditure (child support you paid).
A taxpayer will be eligible to claim the dependent spouse tax offset if their spouse was born before 01 July 1971, their ATI is below $150,000 and their spouse's ATI is less than $9,702.
In your case, your spouse is in receipt of an allocated pension from a superannuation fund. This type of payment is not included in the list above; as such you are not required to include the allocated pension in your spouse's adjusted taxable income.
Accordingly, if your ATI is below $150,000 and your spouse's ATI is less than $9,702 then you will be entitled to claim the dependent spouse tax offset.
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