| Disclaimer This edited version has been archived due to the length of time since original publication.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 written advice
Authorisation Number: 1012723401249
Ruling
Subject: Income
Question
Are you assessable on the income you receive for having homeless and at-risk young people in your home?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
The scheme commenced on
1 July 2013
Relevant facts
You receive payments from an organisation that assists homeless and at-risk young people and families in crisis in the community by providing accommodation and support.
The organisation places at-risk and homeless young people in your home to live with you.
The payments you receive are for the board and sustenance of the young person living in your home.
The payments are effectively the streaming of some of the young person's Centrelink payments. The young person agrees to have some of their payments paid to the organisation which then on-pays the funds to you who is the carer of the young person.
The funds you receive are fully expended upon the household and educational expenses for the young person.
The amount you receive covers all meals, board and school supplies or anything to support the young person.
You may have one or two young people at a time.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Reasons for decision
Section 6-5 of the Income Tax Assessment Act 1997 provides that the assessable income of an Australian resident includes all ordinary income derived directly or indirectly from all sources.
Rental income is normally regarded as ordinary income and therefore forms part of the taxpayer's assessable income. However, where there is a non-commercial or domestic arrangement, amounts paid for board or lodging do not give rise to the derivation of assessable income (FC of T v. Groser 13 ATC 445; (1982) 65 FLR 121; 82 ATC 4478).
Taxation Ruling IT 2167 considers the consequences of different rental income producing situations. Paragraph 18 of IT 2167 states that:
Situations arise where the owner of a residence permits persons to share the residence on the basis that all the occupants, including the owner, bear an appropriate proportion of the costs actually incurred on food, electricity etc. Arrangements of this nature are not considered to confer any benefit on the owner. There is no assessable income and the question of allowable deductions does not arise.
In your case, you currently board a one or two young people in your home. You provide meals, board and school supplies or anything to support the young person. There would be a negligible surplus after you paid for expenses.
The amount you receive is not considered to be a commercial rate as there is no built in benefit component to you.
Therefore, the arrangement is considered to be a non-commercial or domestic arrangement. The amounts you receive are not included in your assessable income.