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Ruling

Subject: spouse tax offset

Question:

Are you entitled to a dependant spouse tax offset for any part of the 2010-2011 tax year?

Answer:

Yes

This ruling applies for the following period

Year ended 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

You lived with your fiancé and their children overseas for part of 2009.

During this time you worked and cared for them.

You came to Australia on a visa later in 2009.

While you were in Australia you sent money overseas to support your fiancé.

Your fiancé came to Australia in mid 2011 and lived with you.

You were the sole income earner and supported your fiancé.

You and your fiancé were married in Australia in October 2011.

You and your fiancé were not entitled to Family Tax Benefit (FTB) Part B in the 2011 tax year.

Relevant legislative provisions

Income Tax Assessment Act 1936 Subsection 6(1),

Income Tax Assessment Act 1936 Subsection 159J,

Income Tax Assessment Act 1936 Section 159J(2) and

Income Tax Assessment Act 1997 Subsection 995-1(1).

Reasons for decision

Under section 159J of the Income Tax Assessment Act 1936 (ITAA 1936), a taxpayer maintaining a person who is a dependant, as specified in that section, may be entitled to a tax offset.

A taxpayer maintains a dependant if they live in the same house and the taxpayer gave them food, clothing and lodging or helped them pay for their living, medical and educational costs.

A taxpayer is eligible to claim a dependent spouse tax offset for any period in 2010-11 that they had a spouse and met all following conditions:

· the taxpayer maintained their spouse

· the spouse was a resident

· the taxpayer was a resident at any time in 2010-11

· neither the spouse (if they were the taxpayer's spouse during that period) nor the taxpayer were entitled to FTB Part B or were only entitled to it at the shared-care rate

· the taxpayer had adjusted taxable income less than $150,000, and

· the spouse has adjusted taxable income less than $9,254.

Definition of 'spouse'

In relation to the 2010-2011 income year under subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997), a person also qualifies as a 'spouse' if they are not married but in a relationship with another individual and they live with the other individual on a genuine domestic basis in a relationship as a couple.

Your circumstances

You stated in your application that you lived with your fiancé overseas for part of 2009 you came to Australia on a visa.

They came to Australia in 2011 and lived with you in the same house from that time and you supported them.

Although you provided financial support to your fiancé when you lived with them and supported them overseas in 2009, as well as after you came to Australia later in 2009, you did not live with your fiancé on a genuine domestic basis in the 2010-2011 income year until they came to Australia in 2011.

Therefore for the 2010-11 year your fiancé does not fall within the definition of 'spouse' under subsection 6(1) of the ITAA 1936 and subsection 995-1(1) of the ITAA 1997 except for the time after she came to Australia and lived with you in 2011.

Your fiancé is a 'dependant' for the purposes of subsection 159J(2) of the ITAA 1936 from the time she arrived in Australia and lived with you in 2011.

Consequently, you are entitled to a dependent spouse tax offset for the period of time in the 2010-11 income year, after your spouse arrived in Australia and commenced living with you on a domestic basis as a couple .

Calculation of dependent spouse tax offset

To work out the spouse tax offset you can claim refer to page 55 (adjusted taxable income) and page 58 (dependent spouse tax offset worksheet) of the publication NAT 0976-6.2011 TaxPack 2011.