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Edited version of your written advice
Authorisation Number: 1012737474390
Ruling
Subject: Child maintenance
Question 1
Are amounts that you receive for child maintenance included in your assessable income?
Answer
No.
This ruling applies for the following period:
Year ending 30 June 2015
The scheme commences on:
1 July 2014
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You have made an agreement with your ex-spouse that they will pay you a monthly amount for the living expenses of your children.
You ex-spouse is a citizen but not a resident of Australia.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2).
Income Tax Assessment Act 1997 Subsection 6-15(2).
Income Tax Assessment Act 1997 Section 51-1.
Income Tax Assessment Act 1997 Section 51-30.
Income Tax Assessment Act 1997 Section 51-50.
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
An amount will not be included in assessable income if the amount is exempt income (subsection 6-15(2) of the ITAA 1997).
Section 51-1 of the ITAA 1997 provides that certain listed amounts will be exempt from income tax. Item 5.1 of section 51-30 of the ITAA 1997 includes periodic payments in the nature of maintenance that meet the requirements of section 51-50 of the ITAA 1997.
Section 51-50 of the ITAA 1997 sets out the conditions on which a periodic payment to a spouse or child which is in the nature of maintenance is exempt from tax. The section provides that the maintenance payment is exempt from income tax only if it is made:
• by an individual (the maintenance payer) or is attributable to a payment made by the maintenance payer; and
• to an individual who is or has been the maintenance payers spouse; or
• to or for the benefit of an individual who is or has been,
• a child of the maintenance payer; or
• a child who is or has been a child of an individual who is or has been a spouse of the maintenance payer.
In your case, you will receive monthly maintenance payments from your ex-spouse for the benefit of your children. Accordingly, the maintenance payments are exempt from income tax in accordance with section 51-50 of the ITAA 1997, and therefore not assessable income under section 6-5 of the ITAA 1997.