Issue
Is the taxpayer entitled to a dependant tax offset under section 159J of the Income Tax Assessment Act 1936 (ITAA 1936) for maintaining a full time student grandchild?
Decision
No, the taxpayer is not entitled to a dependant tax offset under section 159J of the ITAA 1936 for maintaining a full time student grandchild?
Facts
The grandchild of the taxpayer and their spouse has lived with them for a number of years.
The parent of the grandchild is a drug addict and is supposed to be living with the taxpayer. However, due to the nature of the parent's addiction, the taxpayer and their spouse never know where the parent is. The taxpayer has not sought custody of the grandchild as the parent has threatened to remove the grandchild from the family's care if they attempted to do so.
The taxpayer's grandchild is a full-time student under the age of 25.
The taxpayer has incurred costs for education and maintaining the grandchild.
Reasons for Decision
Section 159J of the ITAA 1936 provides that if a taxpayer contributes to the maintenance of a person who is a resident of Australia during an income year, the taxpayer may be entitled to a tax offset.
The dependant tax offsets available under section 159J of the ITAA 1936 are for a: • Spouse • Child-housekeeper • Invalid relative • Parent of the taxpayer or parent of the taxpayer's spouse
The taxpayer is not maintaining a dependant spouse, invalid relative or parent.
A 'child-housekeeper' is defined in subsection 159J(6) of the ITAA 1936 as being a child of the taxpayer who is wholly engaged in keeping house for the taxpayer. The taxpayer's grandchild is not their child and as the grandchild is a full-time student cannot be 'wholly engaged' in keeping house for the taxpayer. The taxpayer is therefore not maintaining a dependant child-housekeeper.
The taxpayer is not considered to be maintaining a dependant under section 159J of the ITAA 1936 and is therefore not entitled to a tax offset. Note: Section 159J of the ITAA 1936 formerly allowed a child less than 16 years of age (not being a student) rebate and a student rebate (rebates are now called tax offsets). However these rebates were abolished from 1 July 1976 (subsection 159J(1A) of the ITAA 1936). The child and student tax offsets are now only notionally retained for the purpose of determining entitlement to certain other tax offsets and Medicare Levy thresholds.