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Edited version of your written advice
Authorisation Number: 1012807734092
Ruling
Subject: Foreign income
Question and answer
Are you assessable on a payment made under the country Y Act paid to your minor child?
No.
This ruling applies for the following periods:
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
The scheme commenced 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 are a resident of Australia for taxation purposes.
Your child who is under the age of 18 receives a children's pension under the country Y Act.
This payment is required to be paid into your bank account until the child reaches the age of 16 at which point the payment will be paid to the child's account in their name solely or jointly.
The payment will be paid to your child until they reach the age of 18 or until they reach the age of 23 if they remain in education up to this age.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5.
Income Tax Assessment Act 1997 Section 6-10.
Income Tax Assessment Act 1997 Section 10-5.
Income Tax Assessment Act 1936 Section 27H.
Reasons for decision
Section 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a taxpayer's assessable income includes statutory income amounts which are not ordinary income but are included in assessable income by another provision.
The assessable income of an Australian resident, includes statutory income from all sources, whether in or out of Australia (subsection 6-10(4) of the ITAA 1997). Particular types of statutory income are listed in section 10-5 of the ITAA 1997.
Taxation Determination TD 92/133 discusses who is assessable on the weekly compensation payments made under subsection 17(5) of the Commonwealth Employees Rehabilitation and Compensation Act 1988 (CERCA 1988) to the dependent child of a deceased employee. Paragraph 2 of TD 92/133 states that
'From the wording of this subsection, it is the child, and not a parent or guardian, who benefits from the compensation; that is, the subsection indicates that the compensation is for the benefit of the child. Even if the parent or guardian actually receives the money, we consider there is a constructive receipt of the compensation by the child because it is payable by law for the benefit of the child…'
Although the above discussion is in the context of periodical compensation paid to a dependant child under the CERCA 1988, it remains relevant to other periodical payments made to a dependent child as a result of the injury or death of a parent.
In accordance with the views expressed at paragraph 2 of TD 92/133, the payments under the country Y Act are considered to be received by your child for taxation purposes.
Therefore, the payment paid to you on behalf of your child is not required to be included as part of your assessable income in your Australian tax return.