Edited version of private ruling

Authorisation Number: 1011839069794

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: Dependant child

Question 1:

Is your spouse's child from a previous relationship considered to be your dependant?

Answer: Yes

Question 2:

Are you eligible for a Medicare levy reduction?

Answer: No

Relevant facts

Your spouse's child from a previous relationship has lived with you and your spouse as a part of your family for the past 11 years, and is supported by you. The child is 13 years old, a resident of Australia for tax purposes, and a full time student. They live with you, your spouse and your other children continually and do not stay with their birth parent at any time. You give them food, clothing and lodging.

Your spouse is supposed to receive child support from her previous partner, but has not received any.

You have three other dependant children for the 2009 financial year and four for the 2010 year.

Your spouse receives family tax benefit for the other children.

Your family taxable income for the 2008-09 and 2009-10 financial years is more than $50,000.

You have paid child support for the last two years, and the child that you were paying child support for is now of an age that you no longer have to pay child support for them.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 251S.

Reasons for decision

Dependant child

A dependant for tax purposes can include a student under 25 years who is studying full time at school, college or university. A child can include a child of your spouse.

A dependant must be an Australian resident who lived in the same house as you and you gave them food, clothing and lodging. A child is not regarded as your dependant for Medicare levy purposes if their adjusted taxable income is more than $1,786 for the 2009-10 year

Your spouse's child falls within the above description. Therefore you are eligible to include them as a dependant.

Medicare levy reduction

Section 251S of the Income Tax Assessment Act 1936 (ITAA 1936) states that an individual who is a resident of Australia at any time during the income year is liable to pay a Medicare levy on their taxable income for the year at the rate set in the Medicare Levy Act 1986 (MLA 1986).

Section 7 of the MLA 1986 provides relief from the levy for certain low income earners. If your taxable income is below the relevant threshold amount, no levy is payable and a reduced levy is payable if your taxable income is within the phase-in limit. The relevant lower income limit is increased for each dependant child.

Your eligibility for a reduction of your Medicare levy is based on you and your spouse's taxable income (Family taxable income) and your circumstances.

In your case, your family taxable income is more than the relevant family threshold amount allowing for four children in the 2008-09 financial year and five children in the 2009-10 financial year. Therefore, you are not entitled to a reduction in the Medicare levy.