| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012232944795
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. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: Child care expenses
Question
Are you entitled to a deduction for the cost of child care for your child?
Answer
No.
This ruling applies for the following periods
Year ended 30 June 2012
Year ending 30 June 2013
The scheme commenced on
1 July 2011
Relevant facts and circumstances
You are in Australia on a 457 visa (sponsorship) with your spouse and child.
Neither you nor your spouse receive government benefits in relation to child care expenses.
You and your spouse both work.
You have incurred child care fees for your child.
You and your spouse would be unable to work if you did not place your child in child care.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
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 assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income or a provision of the taxation legislation excludes it.
The deductibility of child care expenses was examined in the court case Lodge v FC of T (1972) 128 CLR 171; 72 ATC 4174; 46 ALJR 575; 3 ATR 254. In that case, the taxpayer worked under contract from home. To enable her to carry out her duties effectively, she sent her child to a child nursery. The court held that although the expenditure was incurred for the purpose of earning assessable income and it was an essential prerequisite of the derivation of that income, nevertheless, because it was not incurred in the course of carrying out the taxpayer's duties, it was not relevant or incidental to the production of her assessable income. In addition, the expense was considered to be both private and domestic in nature.
You are not entitled to a deduction for the cost of placing your child in child care. Even though incurring the expense enables you to earn assessable income, in the sense that you can undertake paid employment, the expense is not incurred or directly related to how you carry out your employment duties. The fact that you and your spouse do not receive any government assistance does not change the nature of the child care expenses. The expenses remain domestic and private in nature and therefore not deductible.
No deduction is allowable for child care expenses for your child.