Edited version of private advice

Authorisation Number: 1052173425695

Date of advice: 5 October 2023

Ruling

Subject: Assessable income

Question

Is a specified amount of your assessable income that you consider to be a reasonable allowance for your client staying at your residence non-assessable non-exempt income under section 6-15 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

This ruling applies for the following period:

30 June 2023

The scheme commenced on:

1 July 2022

Relevant facts and circumstances

You are an independent support worker.

You provide care to a client with a disability.

You care for the client 8 days a fortnight; you expect this to increase in the future.

You purchase an apartment and have a dedicated bedroom for the client when they sleep the night under your care.

This was not the main reason you purchase the property and was only a secondary consideration.

You charge based on a 24 hour period, you also invoice for taking client to social and recreational activities as a separate amount. You drive client using your own vehicle to work and though out the community.

You invoice the client's parent for your services, who pays for this using National Disability Insurance Scheme (NDIS) funding for the client.

You are also reimbursed for some vehicle usage and the rest is claimed, a logbook is kept supporting your claims.

In addition to this you receive funds from the client's disability support pension to cover the cost of board and lodging. You do not intend to include these amounts in your taxable income because they go toward covering some of the client's living expenses.

You incur expenses of food and household bills while the client is under your care, and you provided an average fortnight of expenses to us.

You believe $250 per day to be a reasonable daily amount for non-claimable items, these are based off short term and medium term accommodation.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 6-15

Income Tax Assessment Act 1997 section 6-20

Income Tax Assessment Act 1997 section 11-15

Reasons for decision

Detailed reasoning

Section 6-5 of the ITAA 1997 provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources during the income year. This includes income derived from all overseas sources.

Income from consultancy services is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.

However, subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income, then it is not assessable income.

Section 6-20 of the ITAA 1997 provides that income which would be ordinary income under section 6-5 is exempt income if a provision of the ITAA 1997 or any other Commonwealth law exempts such an amount from taxation.

Section 11-15 and section 11-55 of the ITAA 1997 outlines the provisions for which ordinary or statutory income is exempt and a list of NANE provisions.

Application to your circumstances

The income you receive as a support worker is related to the care you provide to the client is considered to be ordinary income under subsection 6-5(2) of the ITAA 1997 and is therefore assessable unless exempted by provisions in Commonwealth law.

In your case there is no provision under Commonwealth law that provides an exemption or allowance for the work you do. Though some tax determinations provided allowances for volunteer work was not assessable income, this was because they did not have the character of income according to ordinary concepts, for example: as an employee or carrying on a business. As you are running a business your income has the character of income according to ordinary concepts, therefore the tax determinations for volunteer works cannot be applied to your situation.

While we appreciate your situation, the legislation does not support a portion of your income being classified as NANE nor as a non-taxable allowance in your circumstances. Additionally, the Commissioner does not have the discretion to allow a portion of your income to be considered non-assessable.