Edited version of your private ruling

Authorisation Number: 1012456578693

Ruling

Subject: Child-housekeeper tax offset

Question

Are you entitled to a child housekeeper tax offset for the years ended 30 June 2011 and 30 June 2012?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2011

Year ended 30 June 2012

The scheme commence on:

1 July 2010

Relevant facts and circumstances

You are an Australian resident.

You and your spouse are working full time and your combined adjusted taxable income is below $150,000 in both the 2010-11 and 2011-12 financial years.

You were not eligible for a dependent spouse tax offset due to your spouse's adjusted taxable income being in excess of the threshold.

You were not eligible for Family Tax Benefits (FTB) and you were not in receipt of parental leave pay.

You have an adult child who is a resident of Australia and is also married with one child.

Your adult child was not a student and the only income earned in both years was well below the adjusted taxable income thresholds.

Your adult child has been keeping and looking after your house during the past three years. Including:

- the normal household chores;

- maintaining the house in good order and condition;

- shopping for groceries and other household needs;

- pays bills under your instruction; and

- contacts and organises arrangements with third parties in relation to any house repairs, maintenance, insurance and other household affairs.

For doing this you have been supporting your adult child's living expenses by providing free accommodation, food and basic utilities like power, water and gas.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 159J

Income Tax Assessment Act 1936 Subsection 159J(4)

Income Tax Assessment Act 1936 Subsection 159J(5)

Income Tax Assessment Act 1936 Subsection 159J(5D)

Reasons for decision

Child-housekeeper tax offset

Tax offsets are designed to provide a measure of tax relief to taxpayers who for one reason or another are disadvantaged in comparison to other taxpayers on similar incomes.

Where a resident taxpayer contributes to the maintenance of one or more dependants they may be entitled to a tax offset under section 159J of the Income Tax Assessment Act 1936 (ITAA 1936). There are a number of dependant tax offsets available to taxpayers. One such is for a child-housekeeper.

There are five conditions, which must all be met, to be eligible for the child-housekeeper tax offset. One of these conditions is based on whether you are eligible for a dependant spouse tax offset.

Subsection 159J(4) of the ITAA 1936 says:

The amount of the rebate otherwise allowable under this section in respect of a dependant shall be reduced by $1 for every $4 by which the dependant's adjusted taxable income for the year of income exceeds $282.

Subsection 159J(5D) of the ITAA 1936 says:

Where, by reason that, during the whole or a part of the year of income, a taxpayer contributes to the maintenance of a dependant included in class 1 in the table in subsection (2), the taxpayer is entitled, or would, but for subsection (4) be entitled, in his or her assessment in respect of income of the year of income, to a rebate under this section, a child of the taxpayer shall be deemed not to have been engaged in keeping house for the taxpayer during the while or that part of the year of income, as the case may be.

You were maintaining your spouse as you were married for whole of the years ended 30 June 2011 and 2012 and you were eligible for a dependant spouse tax offset (reduced to zero due to ATI of your spouse).

As you contributed to the maintenance of your spouse, subsection 159J(5D) of the ITAA 1936 applies and no child-housekeeper tax offset is available to you.