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Are the payments received by the taxpayer from an insurance company for taking care of their spouse, assessable income under subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Yes. The payments received are assessable income under subsection 6-5(2) of the ITAA 1997 because the payments received are for services rendered.

The taxpayer's spouse suffered injuries at work and requires the services of a home based carer on a full time basis. The insurance company have agreed to accept the taxpayer as the spouse's carer. The taxpayer will undertake weekly carer's duties and will be paid at an hourly rate. Payments to the taxpayer are made under the appropriate section in the worker's compensation legislation.

Subsection 6-5(2) of the ITAA 1997 provides that assessable income includes income according to ordinary concepts, known as ordinary income.

Ordinary income has generally been held to include three categories, namely, income from rendering personal service, income from property and income from carrying on a business. In this instance, the taxpayer is paid by an insurance company to provide home care to an incapacitated spouse.

As the amounts received are payments received for personal services rendered they are income according to ordinary concepts. The income will be assessable income under subsection 6-5(2) of the ITAA 1997. Note: The taxpayer may be entitled to claim losses and outgoings to the extent to which they are incurred in gaining or producing assessable income as a carer except where the outgoings are of a capital, private or domestic nature.

Date of amendment Part Comment 4 April 2014 Issue Updated for clarification.

Date of amendment | Part | Comment

4 April 2014 | Issue | Updated for clarification.