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Edited version of private ruling
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Ruling
Subject: Dependant spouse tax offset
Question
Are you entitled to claim a dependant spouse tax offset under section 159J of the Income Tax Assessment Act 1936 (ITAA 1936) if your spouse does not live in Australia?
Answer
Yes
This ruling applies for the following period:
Year ended 30 June 2010
The scheme commences on:
1 July 2009
Relevant facts and circumstances
You moved to Australia from overseas on a temporary work visa.
Your spouse and children did not accompany you to Australia.
You send money to your spouse on a regular basis to provide financial support to your family.
After you moved to Australia your spouse received a passport and is intending to migrate once you receive your sponsored migration visa.
During the 2009-10 year of income you are considered to be a resident of Australia for taxation purposes.
Your taxable income did not exceed $150,000 and your spouse's adjusted taxable income did not exceed $9,254 in the 2009-10 year of income.
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 6(1)
Income Tax Assessment Act 1936 Section 159J
Income Tax Assessment Act 1936 subsection 159J(1)
Income Tax Assessment Act 1936 subsection 159J(3A)
Reasons for decision
Summary
As your spouse is considered to have a domicile in Australia and does not have a permanent place of abode outside Australia; you are entitled to claim a dependant spouse tax offset for the 2009-10 year of income.
Detailed reasoning
Subsection 159J(1) of the ITAA 1936 provides that a taxpayer is entitled to a tax offset where, during the year of income, they contributed to the maintenance of a dependant spouse who is a 'resident of Australia'.
A 'resident of Australia' is defined in subsection 6(1) of the ITAA 1936. However subsection 159J(3A) of the ITAA 1936 provides that in applying the definition of resident in subsection 6(1) of the ITAA 1936 for the purposes of the dependant spouse tax offset, the dependant spouse of a taxpayer will be taken to have the same domicile as the taxpayer.
Therefore your spouse is deemed to have a domicile in Australia for the purposes of the definition of resident in subsection 6(1) of the ITAA 1936. Subsection 6(1) of the ITAA 1936 defines a resident to include a person whose domicile is in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside Australia.
The leading case on permanent place of abode is Applegate v. FC of T 79 ATC 4307; (1979) 9 ATR 899. The Federal Court stated that in respect of the definition of 'resident', a permanent place of abode does not have to be everlasting or forever but it is rather used in contrast to temporary or transitory. Taxation Ruling IT 2650 also considers residency and permanent place of abode outside Australia. Paragraph 12 of IT 2650 states that 'place of abode' refers to a person's residence, where one lives with one's family and sleeps at night. In essence, a person's 'place of abode' is that person's dwelling place of the physical surroundings in which a person lives.
In your case, your spouse is currently living overseas and therefore has a current 'place of abode' overseas; however this is only a temporary arrangement. Even though your spouse has to wait until you receive your sponsored migration visa, they have made the appropriate steps and intend to migrate to Australia as soon as possible. Accordingly, the Commissioner accepts that your spouse does not have a permanent place of abode outside of Australia.
As your spouse is deemed to have a domicile in Australia and does not have a permanent place of abode outside of Australia, your spouse is considered to be a resident under the definition under subsection 6(1) of the ITAA 1936. Therefore you have a resident dependant and are entitled to a dependant spouse tax offset under section 159J of the ITAA 1936.