ATO Interpretative Decision
ATO ID 2002/576 (Withdrawn)
Dependant Tax Offset - spouse in prison
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||This ATO ID is withdrawn because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 2013-2014 income year.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.
Status of this decision: Decision withdrawn 24 March 2017.
|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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.
Is the taxpayer entitled to a dependant tax offset under section 159J of the Income Tax Assessment Act 1936 (ITAA 1936) for maintaining a spouse who is in prison?
Yes. The taxpayer is entitled to a dependant tax offset under section 159J of the ITAA 1936 for maintaining a spouse who is in prison, but the tax offset will be apportioned as two or more persons contribute to the maintenance of the spouse.
The taxpayer is a resident of Australia.
The taxpayer's spouse was in prison in Australia for the whole of the income year.
The taxpayer's spouse had separate net income (SNI) from the Department of Justice, Prison Service.
The taxpayer's spouse was dependent on the Prison Service for their accommodation, meals and some of their personal needs such as medical services. The taxpayer sent money to their spouse to assist with other living expenses while they were in prison. They also paid the spouse's outstanding debts while they were in prison.
Reasons for Decision
Subsection 159J(1) of the ITAA 1936 provides that a resident taxpayer is entitled to a tax offset where, during the income year, they contributed to the maintenance of a dependant who is also a resident of Australia.
A spouse of the taxpayer may be a dependant for the purposes of the dependant tax offset (subsection 159J(2) of the ITAA 1936).
Paragraph 159J(3)(b) of the ITAA 1936 provides that where two or more persons contribute to the maintenance of a person who is a dependant of one or more of those contributing, then a partial tax offset will be allowed to the taxpayer. The amount allowed shall be such part of the tax offset as is considered by the Commissioner to be reasonable in the circumstances.
In Case U190 87 ATC 1089; Tribunal Case 128 (1987) 18 ATR 3938, the Administrative Appeals Tribunal considered the allowability of a partial dependant tax offset. In that case the taxpayer's spouse was in prison. The Tribunal found that the taxpayer could claim a partial dependant tax offset for the time their spouse was in prison. They found that the Director of Prisons was a 'person' for the purposes of subsection 159J(3) of the ITAA 1936, and had contributed to the maintenance of the taxpayer's spouse for the time they were in prison. Therefore, a reduction in the tax offset was justified as two persons contributed to the maintenance of the spouse.
The taxpayer's spouse was in prison for the full income year and for this period was maintained by the Department of Justice, Prison Service. The taxpayer also contributed towards their spouse's maintenance by providing financial support.
As two or more persons contributed to the maintenance of the taxpayer's spouse, a partial dependant tax offset is appropriate. The taxpayer will be allowed a partial dependant tax offset of 50% of the available tax offset (calculated after taking the spouse's SNI into account) under section 159J of the ITAA 1936, given that the other requirements of the section are satisfied.
|Date of amendment
|4 July 2014
||Reasons for Decision
||Adjusted wording to better reflect the legislation and tribunal decision, and to improve clarity
Amended case reference
||Amended case reference
Date of decision: 15 March 2002
|Year of income:||Year ended 30 June 2001|
Income Tax Assessment Act 1936
87 ATC 1089
Tribunal Case 128
(1987) 18 ATR 3938
Siebel/TDMS Reference Number: DW365706; 1-AV73GXE
Business Line: Small Business/Individual Taxpayers
Date of publication: 31 May 2002