| Disclaimer This edited version has been archived due to the length of time since original publication.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: 1012566361037
Disclaimer
You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you or to someone acting on your behalf.
The Register of private binding rulings is a public record of private rulings issued by the ATO. The register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies.
The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.
Ruling
Subject: Expenses - other
Question
Is the Special Disability Trust (SDT) entitled to a deduction for the accommodation and care expenses relating to the beneficiary?
Answer
No
This ruling applies for the following period
1 July 2013 to 30 June 2014
The scheme commenced on
1 July 2013
Relevant facts and circumstances
A SDT was established by the family of the beneficiary.
The beneficiary has a severe disability and is the sole beneficiary of the Trust.
The funds in the SDT are invested, earning interest and generating an annual income
The Trust incurred expenses on the accommodation and care of the beneficiary.
Some of the income of the trust was unexpended.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
The trustee of a special disability trust is generally liable to pay tax on the whole of the net income of the trust at the principal beneficiary's personal income tax rate.
The general deduction provision, 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 and producing assessable income, except where the outgoings are of a capital, private or domestic nature.
Expenditure on the daily necessities of life (e.g., food and shelter) is generally a private expense and is not incurred in gaining or producing assessable income.
Various court decisions have concluded that, generally, accommodation and food expenses are essentially 'living expenses' of a private or domestic nature and not deductible (FC of T v. Cooper 91 ATC 4396; (1991) 21 ATR 1616; FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466).
The circumstances of the trust do not change the essential character of these expenses as private or domestic in nature.
The expenditure incurred by the trust on accommodation and care of the beneficiary is not deductible under section 8-1 of the ITAA 1997 as it is not incurred in gaining or producing assessable income and is also private or domestic in nature.