Issue
Does Division 6AA of the Income Tax Assessment Act 1936 (ITAA 1936) apply to income received by a taxpayer who is under 18 years of age and is in receipt of Carer Allowance?
Decision
No, Division 6AA of the ITAA 1936 will not apply to income received by a taxpayer who is under 18 years of age and in receipt of a Carer Allowance.
Facts
The taxpayer was under 18 years of age at the end of the year of income.
The taxpayer has a disability.
The taxpayer was in receipt of a Carer Allowance (previously known as a child disability allowance) at the end of the year of income.
Reasons for Decision
Division 6AA of the ITAA 1936 imposes a higher rate of tax on 'eligible taxable income' derived by a person who is less than 18 years of age at the end of the year of income if they are not an 'excepted person'.
An 'excepted person' is defined in section 102AC of the ITAA 1936 and includes a person in respect of whom a carer allowance was payable under the Social Security Act 1991 on the last day of the year of income.
As the taxpayer was under 18 years of age and in receipt of the Carer Allowance on the last day of the year of income, they are an 'excepted person' under section 102AC of the ITAA 1936. Division 6AA of the ITAA 1936 will therefore not apply to income derived by the taxpayer during the year of income.