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Edited version of your written advice

Authorisation Number: 1012723402982

Ruling

Subject: Foster carer

Question

Are you assessable on the income you receive to foster a child?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2015

Year ended 30 June 2016

Year ended 30 June 2017

Year ended 30 June 2018

The scheme commenced on

1 July 2014

Relevant facts

You receive payments to foster a child.

The payments are made to help meet the costs associated with providing care for the child.

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

The payments are the standard or basic foster care subsidies plus additional loadings or allowances and are not payments for, or in the nature of payments for, the provision of services.

You provide the care and support that a parent would provide, including accommodation, food and clothing, personal needs and entertainment.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Section 15-2

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes all ordinary income derived directly or indirectly from all sources.

Ordinary income has generally been held to include income from rendering personal services, income from property and income from carrying on a business.

Section 15-2 of the ITAA 1997 states that  your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to you in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by you.

Taxation Determination TD 2006/62 Income tax: are certain payments to a volunteer foster carer to provide foster care assessable income, 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 payment is to cover the ongoing living costs of a foster child with a disability. You are not an employee of a 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 as you are a volunteer carer. Therefore, payment does not have the character of ordinary income and the payment is not in relation to any employment or rendering of services and is not statutory income.

As the payment is not ordinary income or statutory income it is not included in your assessable income.

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