Edited version of your private ruling

Authorisation Number: 1012616858869

Ruling

Subject: Income - other - caregiver payments

Question

Are caregiver reimbursement payments (caregiver payments) considered assessable income?

Answer

No.

This ruling applies for the following periods

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017

Year ending 30 June 2018

The scheme commences on

1 July 2013

Relevant facts and circumstances

You and your spouse have provided full-time care to a person who has been diagnosed with a medical condition, a significant intellectual disability and a profound hearing disability.

You and your spouse have been appointed as this person's legal guardians. This arrangement is reviewed every three years.

This person requires full assistance with all aspects of daily living, which includes:

• personal care including and not limited to toileting, showering/bathing, oral hygiene

• administering medication

• supporting the person to attend medical and therapy appointments

• communication

• community access

• social and emotional support

• shopping

• laundry

• finance (money handling/financial assistance/ budgeting)

• mobility

• mealtime management including preparation of meals and feeding

You and your spouse incur costs in relation to the care you provide to this person such as:

• food and drink

• laundry

• transport

• contributions to household bills

• medications, personal and oral hygiene items

• medical and therapy appointments

• recreational activities

The person you care for currently receives government funding. The disability specific funding is used to pay for supports that will meet the person's disability support goals and needs.

Under their current funding plan you and your spouse receive a caregiver payment which is administered through a financial intermediary and they have advised that they will no longer administer this payment.

A revised funding proposal is being prepared for submission to the department to change how the caregiver payments are being administered. Instead of being administered through a financial intermediary it will now be funded as a direct payment.

The amounts you will receive will not cover all the costs that you incur in relation to the person you and your spouse care for.

You and your spouse are the nominated persons named in the current and proposed funding plan for receipt of the direct payments on behalf of the disabled person. You opened a joint account exclusively for receipt of the monthly direct payment from the department.

A direct payment is already made by the department into the account to pay for continence products, therapies, respite costs, and a contribution towards technology, transport and cleaning. When the funding proposal is approved the caregiver payment will be included in the monthly direct payment.

The use of the funds deposited into the account is reviewed by the department and the expenditure is monitored. You and your spouse are responsible for keeping a record (cash log) of all cash that is withdrawn and spent from the account and the types of purchases you make with the cash. You provided the department with copies of the bank statements, receipts, invoices, direct debit authorisations and the cash log.

You are not an employee of the department or the financial intermediary and are not in the business of providing full-time or part-time care.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

Income Tax Assessment Act 1997 Section 6-10

Reasons for decision

Section 6-5 and section 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary and statutory income derived directly and indirectly from all sources during the income year.

In your situation you are providing care for a disabled person and you receive an amount which is intended to reimburse you for the various costs you incur for looking after the person. You have advised that the amounts you receive do not fully cover the costs that you incur in relation to the person you are caring for.

Taxation Determination TD 2004/75 Income tax: are payments to a volunteer respite carer to cover expenses of providing respite care for a disabled person assessable income, provides guidance about where a carer receives a reimbursement for the costs of caring for a disabled person. Where the payment is intended to cover expenses incurred in providing the care including food and drink, laundry, recreation activities and transport the payment is considered to be in the nature of a reimbursement of expenses and therefore is not assessable income.

Based on the facts provided we accept that you are receiving monies from the department with the intention that these monies will be used to cover the costs you incur in providing care to the disabled person. Such payments are not considered to be ordinary income or statutory income.

Therefore, the payments do not form part of your assessable income and you are not required to include the amounts in your tax return.

Additional note

It is noted that you asked for the private ruling to apply for the relevant financial year and onwards. The Commissioner does not rule for indefinite or extended periods as there may be changes to the facts of the arrangement or the law in question. Also, a public ruling may issue which affects the private ruling. Therefore, we have only ruled for the relevant financial years.