Edited version of private ruling

Authorisation Number: 1011796933291

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Ruling

Subject: expenses and deductions

Questions and answers:

Are you entitled to a deduction for expenses associated with the care of your spouse?

No.

Are you entitled to a deduction for costs associated with your home?

No.

Are you entitled to a deduction for the amount of rent that you would receive had your circumstances not prevented you from making the unit available for rent?

No.

This ruling applies for the following periods:

Year ended 30 June 2009
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011

The scheme commenced on:

1 July 2007

Relevant facts

You care for your sick spouse.

You have cared for your spouse for a number of years.

You are a self funded retiree.

You get a carers' allowance from Centrelink.

Relevant legislative provisions

Income tax Assessment Act 1997 Section 8-1

Reasons for decision

Clothing, entertainment, hairdressing, make-up and podiatry

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing your assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.

Expenditure on the daily necessities of life such as entertainment, hairdressing, make-up, podiatry and travel to places such as the shopping centre are generally private in nature and are not incurred in gaining or producing your assessable income.

In addition, the cost of acquiring clothing is generally of a private nature as clothing has to be worn to observe dress proprieties rather than for reasons that will establish an income-earning connection.

These expenses belong to your spouse and the fact that you cover these costs does not mean you are eligible for a deduction. The expenses are not incurred in gaining or producing your assessable income and therefore are not deductible under section 8-1 of the ITAA 1997.

Babysitting and secretarial assistant

Similarly, the expenditure incurred on these are private in nature and are not incurred while you are gaining or producing your assessable income.

The carer allowance you receive provides you with an additional supplementary payment to that of your self funded income to assist you in your caring role. In return for these payments it is expected that you will provide full-time care in accordance with Centrelink's requirements.

The expenses incurred in paying for babysitting and a secretary are not deductible to you under section 8-1 of the ITAA 1997 as they are your spouse's expenses.

Utilities, gas and water

Utilities gas and water are the daily necessities of life and everyone requires these services. They too are private in nature and are not deductible under section 8-1 of the ITAA 1997.

Rent

Rent is not a deductible expense under section 8-1 of the ITAA 1997 as it is a private expense.

In your case where you are currently living may not be where you would like to be living and you could be earning income from your residence, however there are no provisions in the taxation law that permit a deduction for such an expense.

Summary

You are not entitled to a deduction for any of these expenses under section 8-1 of the ITAA 1997 as the requisite connection between each expense and the receipt of the Centrelink payment does not exist. These expenses are not yours; they are the expenses of your wife which you have chosen to pay.

As outlined above, the carer allowance is an income supplement paid to someone who provides daily care at home to a person with a disability or medical condition and you will continue to receive the allowance whether or not you incur these expenses. There are no guidelines on how care should be given in order to receive the payment.

Consequently no deduction is allowed for clothes, entertainment, hairdressing, make-up, podiatry, travel cost, babysitting, secretarial assistant, utilities, gas, water and rent.