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Edited version of your written advice
Authorisation Number: 1012832353850
Ruling
Subject: Carer payments
Question
Are carer reimbursement payments considered assessable income?
Answer
No.
This ruling applies for the following periods
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
Year ending 30 June 2019
Year ending 30 June 2020
The scheme commenced on
1 July 2015
Relevant facts
You are providing full-time care to a person who has significant health issues.
The care you provide is extensive and covers all their personal and day to day needs.
You incur costs as part of your provision of care.
The person currently receives funding from a government department. The funds are paid to help pay for support that will meet their disability support goals and needs.
The payments commenced several years ago and are indexed each year.
The specific payment that is intended is based on the complex non high risk level and you receive a fortnightly payment.
These funds are used to purchase and attend day programs, respite and equipment.
You are the care giver and the person gives you a reimbursement payment from their individual support package.
The money goes towards the care and support of this person.
You are not an employee of the department 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 determining if an amount is income according to ordinary concepts, consideration must be given to whether the amount is the product of any income producing activity.
Such an activity could include employment, carrying on a business or rendering a service.
Taxation Ruing IT 2639 describes income from personal services as 'income that an individual earns predominantly as a direct reward for his or her personal efforts by, for example, the provision of services, exercise of skills or the application of labour'.
The receipt of payment as a reward for services (which would be considered assessable income) can be contrasted with the receipt of a payment to a volunteer to reimburse them for costs incurred by them in the carrying out of their activities. A payment to a volunteer for the reimbursement of expenses is not considered to be assessable income.
Paragraph 8 of Taxation Determination TD 2004/75 provides the following example of a reimbursement:
Peter provides volunteer respite care for a child with disabilities for one weekend (Friday evening to Monday morning) per month. Peter is paid an amount of $350 for the weekend by an organisation that arranges respite care for disabled persons. The payment is intended to cover expenses incurred in providing the respite 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 included in Peter's assessable income.
Similarly in Taxation Determination TD 2006/62, the Commissioner notes that certain payments made to volunteers to allow for their provision of foster care would not amount to assessable income. Such payments would include 'standard or basic foster care subsidies plus additional loadings or allowances' in relation to payments 'made to help meet the costs associated with providing care for foster children'. TD 2006/62 does not apply to payments made to employees of foster care agencies.
Based on the facts provided, we accept that you are not being paid for your personal services but are receiving monies from the disabled person with the intention that these be used to cover the costs you may incur in providing care. 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 anywhere in your tax return.