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Edited version of your private ruling
Authorisation Number: 1012459276070
Ruling
Subject: Assessable income - excepted person
Question
Are you an 'excepted person' under subsection 102AC(2) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer
Yes
This ruling applies for the following periods:
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
The scheme commences on:
1 July 2007
Relevant facts and circumstances
You are under 16 years of age and are a beneficiary of a discretionary trust.
You have been diagnosed with a disability.
Your doctor has confirmed your diagnosis in a letter and stated, among other things, the following:
· you require substantially greater care and attention on a daily basis, compared to other children your age
· the need for this extra care will be a long term requirement
Relevant legislative provisions
Income Tax Assessment Act 1936 Division 6AA
Income Tax Assessment Act 1936 Subsection 102AC(1)
Income Tax Assessment Act 1936 Subsection 102AC(2)
Social Security Act 1991 Part 2.19
Reasons for decision
Division 6AA of the ITAA 1936 ensures that special rates of tax and a lower tax free threshold apply in working out the basic income tax liability on taxable income, other than excepted income, derived by a prescribed person.
A 'prescribed person' is defined in subsection 102AC(1) of the ITAA 1936 to include any person, other than an excepted person (as defined in subsection 102AC(2) of the ITAA 1936), under 18 years of age at the end of the income year.
An 'excepted person' is defined in subsection 102AC(2) of the ITAA 1936 and includes a person in respect of whom the Commissioner has received a certificate issued by a legally qualified medical practitioner certifying that they are a disabled child, or a disabled adult, within the meaning of Part 2.19 of the Social Security Act 1991 (SSA 1991).
A person is a 'disabled child' within the meaning of Part 2.19 of the SSA 1991 (section 952 of the SSA 1991) if:
· they have a physical, intellectual or psychiatric disability;
· they need care and attention from another person on a daily basis to an extent substantially greater than that needed by a person of the same age who does not have such a disability; and
· the person is likely to need that care and attention permanently or for an extended period.
In your case, you have been provided with a certificate issued by a legally qualified medical practitioner confirming a diagnosis a disability. The certificate also states that you require substantially greater care and attention on a daily basis than that required by others your age and that this requirement will be long term.
Therefore you meet each of the above requirements, and the Commissioner would be satisfied that you are a 'disabled child' within the meaning of Part 2.19 of the SSA 1991.
You are therefore an excepted person under subsection 102AC(2) of the ITAA 1936. Accordingly the special rates of tax under Division 6AA of the ITAA 1936 will not apply to income derived by you during the 2008 to 2012 financial years.
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