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Ruling

Subject: Fostering payments

Question

Is the fortnightly fostering payment you receive for being a volunteer foster carer assessable income?

Answer

No.

This ruling applies for the following period

Year ending 30 June 2013

The scheme commences on

1 July 2012

Relevant facts and circumstances

You are a full-time volunteer foster carer.

You are not an employee of a fostering agency and you are not in the business of providing foster care.

You receive a fortnightly fostering payment (based on the identified needs of the child/young person and the level of care required) for the provision of full-time care.

The fostering payment you receive is to cover the costs of the child or young person in placement. These include:-

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Section 6-10

Reasons for decision

Section 6-5 and section 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary and statutory income derived directly and indirectly from all sources during the income year.

In determining if an amount is income according to ordinary concepts, consideration must be given to whether the amount is the product of any income producing activity.

Such an activity could include employment, carrying on a business or rendering a service.

Taxation Determination TD 2006/62 considers the taxation treatment of certain payments to volunteer foster carers to provide foster care. TD 2006/62 provides that payments made to volunteer foster carers are not assessable income where:

In your case, the fortnightly fostering payments you receive are made to help you meet the ongoing costs associated with providing care for your foster care placements. You are not an employee of the foster care agency, are not carrying on a business of providing foster care and are not paid for any personal services you provide as a foster carer.

Payments to volunteer foster carers for a child in care are regarded as a reimbursement of the costs associated with the care of that foster child. Such payments are not ordinary income or statutory income.

As the payments are not ordinary or statutory income it is not assessable income and you are not required to include this income anywhere in your tax return.

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