ATO Interpretative Decision

ATO ID 2004/338 (Withdrawn)

Income Tax

Spouse Tax Offset: separated spouse in receipt of family tax benefit
FOI status: may be released

This ATO ID is withdrawn because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 2013-2014 income year. Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of decisions for income years up to, and including, the 2013-2014 income year.

This document has changed over time. View its history.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the taxpayer entitled to a spouse tax offset under section 159J of the Income Tax Assessment Act 1936 (ITAA 1936) even though their separated spouse is in receipt of the family tax benefit at the Part B rate under the A New Tax System (Family Assistance) Act 1999 (ANTS (FA) Act 1999)?

Decision

Yes. The taxpayer is entitled to a spouse tax offset under section 159J of the ITAA 1936 even though their separated spouse is in receipt of the family tax benefit at the Part B rate under the ANTS (FA) Act 1999 as they are no longer living together?

Facts

The taxpayer is separated from their spouse and they do not live together.

The taxpayer is still legally married to their spouse.

The taxpayer and their spouse are both residents of Australia.

The taxpayer contributed to the maintenance of their spouse during the income year.

The spouse's separate net income for the income year was below the threshold over which no offset is allowable.

The spouse is not being maintained by another person.

The spouse receives the family tax benefit at the Part B rate under the ANTS (FA) Act 1999.

Reasons for Decision

Section 159J of the ITAA 1936 allows a tax offset where a taxpayer contributes to the maintenance of a dependant who is a resident. Subsection 159J(2) of the ITAA 1936 specifies that a dependant includes a taxpayer's 'spouse'.

In relation to the meaning of the word 'spouse', The Macquarie Dictionary [Multimedia], version 5.0.0, 1/10/01 contains the following definitions:

•: Spouse, as '...either member of a married pair in relation to the other; one's husband or wife'.
•: Husband, as '...a man joined in marriage to a woman'.
•: Wife, as '...a woman joined in marriage to a man'.

Subsection 6(1) of the ITAA 1936 extends the common meaning of 'spouse' to include:

...in relation to a person, includes another person who, although not legally married to the person, lives with the person on a bona fide domestic basis as the husband or wife of the person.

As the taxpayer is still legally married their separated spouse is still a dependant for the purposes of section 159J of the ITAA 1936.

Subsection 159J(1AA) of the ITAA 1936 states:

A taxpayer is not entitled, in his or her assessment in respect of a year of income, to a rebate under this section in respect of a dependant included in class 1 or 2 [which includes a spouse] in the table in subsection (2), if, during the whole of that year of income:

(a)
the taxpayer, or the taxpayer's spouse while being the taxpayer's partner as defined in the A New Tax System (Family Assistance) Act 1999, was eligible for family tax benefit at the Part B rate within the meaning of that Act; and

(b)
clause 31 of Schedule 1 to that Act did not apply to the Part B rate.

Subsection 3(1) of the ANTS (FA) Act 1999 states that 'partner' has the same meaning as in the Social Security Act 1991 (SSA 1991).

Subsection 4(1) of the SSA 1991 states 'a partner, in relation to a person who is a member of a couple, means the other member of the couple.'

Further, subparagraph 4(2) of the SSA 1991 states that:

Subject to subsection (3), a person is a member of a couple for the purposes of this Act if:

(a)
the person is legally married to another person and is not, in the Secretary's opinion (formed as mentioned in subsection (3)), living separately and apart from the other person on a permanent or indefinite basis; or

(b)
all of the following conditions are met:

(i)
the person has a relationship with a person of the opposite sex (in this paragraph called the "partner");

(ii)
the person is not legally married to the partner;

(iii)
the relationship between the person and the partner is, in the Secretary's opinion (formed as mentioned in subsections (3) and (3A)), a marriage-like relationship;

(iv)
both the person and the partner are over the age of consent applicable in the State or Territory in which they live;

(v)
the person and the partner are not within a prohibited relationship for the purposes of section 23B of the Marriage Act 1961.

Subsection 4(3A) of the SSA 1991 states:

The Secretary must not form the opinion that the relationship between a person and his or her partner is a marriage-like relationship if the person is living separately and apart from the partner on a permanent or indefinite basis.

The taxpayer is 'living separately and apart' from their spouse. Thus, according to subsection 4(3A) of the SSA 1991, the taxpayer and their separated spouse are not a 'couple' for the purposes of the SSA 1991.

As the taxpayer and their separated spouse are not a 'couple' for the purposes of the SSA 1991, the separated spouse is not considered to be the taxpayer's 'partner' for the purposes of the SSA 1991.

The taxpayer's separated spouse is not then considered to be the taxpayer's 'partner' for the purposes of the ANTS (FA) Act 1999.

Consequently, the taxpayer's separated spouse is not the taxpayer's 'partner' for the purposes of subsection 159J(1AA) of the ITAA 1936. Therefore the taxpayer retains their entitlement to the dependant tax offset with regard to their separated spouse.

The amount of the family tax benefit received by the taxpayer's separated spouse is excluded from the definition of separate net income (subsection 159J(6) of the ITAA 1936) and does not reduce the amount of the tax offset otherwise allowable to the taxpayer.

Accordingly, the taxpayer is entitled to a dependant spouse tax offset under section 159J of the ITAA 1936 in relation to their separated spouse who is in receipt of a family tax benefit.

Date of decision: 19 August 2003

Year of income: Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1936
   subsection 6(1)
   section 159J
   subsection 159J(1AA)
   subsection 159J(2)
   subsection 159J(6)

A New Tax System (Family Assistance) Act 1999
subsection 3(1)

Social Security Act 1991
   subsection 4(1)
   subsection 4(2)
   subsection 4(3A)

Keywords
Family tax assistance
Dependent spouse
Spouse
Spouse having different main residence
Spouse rebates

Business Line: Small Business/Individual Taxpayers

Date of publication: 16 April 2004

ISSN: 1445-2782

history

	Date:	Version:
	19 August 2003	Original statement
You are here	24 March 2017	Archived

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