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Ruling

Subject: Spouse tax offset

Question 1

Are you entitled to a spouse tax offset for the 2007-08 and 2008-09 financial years?

Answer

No.

Question 2

Are you entitled to a spouse tax offset for a portion of the 2009-10 financial year?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2008

Year ended 30 June 2009

Year ended 30 June 2010

The scheme commenced on

1 July 2007

Relevant facts

You are an Australian resident.

You met a person (your spouse) on-line in 20XX.

You travelled overseas in March 20XX and lived with your spouse for the six months of your visa and became engaged.

You returned overseas for a further six months in April 20XX and lived with your spouse. At this time you provided funds for extensive renovations and improvements to your spouse's family home.

Since meeting your spouse you have entirely supported her in her country.

You did not apply for your spouse to come to Australia until April 20XX because they were studying, you were saving and they had family issues. This visa was denied.

Your spouse then applied for another visa in May 20XX. This visa was granted.

Your spouse arrived in Australia in August 20XX and you were married in November 20XX. Your spouse then returned overseas and you applied for a visa for them to come to Australia permanently.

A permanent visa was granted in June 2011.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1)

Income Tax Assessment Act 1936 Section 159J

Income Tax Assessment Act 1997 Section 995-1

Reasons for decision

Section 159J of the Income Tax Assessment Act 1936 (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 spouse who is a 'resident of Australia'.

A spouse is defined in section 995-1 of the Income Tax Assessment Act 1997 as a wife to whom you are legally married, or a person who lives with you on a genuine domestic basis as your wife.

A 'resident of Australia' is defined in subsection 6(1) of the ITAA 1936. 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.

The taxpayer's spouse is therefore, 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 or the physical surroundings in which a person lives.

A spouse who is waiting to migrate to Australia is not considered to have a permanent place of abode outside Australia if the spouse has taken timely and appropriate steps to migrate to Australia.

In your case, your spouse did not take any steps to migrate to Australia until April 20XX. The law has not prevented your spouse from applying to come to Australia. Rather, they did not take any steps until they completed their study, their family issues were resolved and you had saved sufficient funds.

While we accept that you lived together while you were overseas and that you have supported your spouse since you met, up until your spouse applied to come to Australia, the Commissioner considers that their place of abode was overseas and they were not a resident of Australia. As such, you are not entitled to a spouse tax offset.

However, as your spouse had taken appropriate steps to migrate to Australia from April 2010, it is considered that your spouse is a resident of Australia and is your dependant. Therefore, you are entitled to a spouse tax offset from April 20XX.