Assessability of a sleepover allowance paid to a care worker

Is an allowance paid to the taxpayer when they are required to attend a client's premises during specific hours, assessable under section 15-2 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Yes. The allowance paid to the taxpayer for attending a clients premises during specific hours is assessable under section 15-2 of the ITAA 1997.

The taxpayer is a support worker who assists people with disabilities. As part of the taxpayer's duties they are occasionally required to be present at a client's premises during certain hours (or part thereof) to assist the client with any of their needs during the night.

The taxpayer is paid a set hourly rate for the number of hours worked, and in addition is paid a sleepover allowance for having been available to attend to the client's needs between specific hours. This allowance is paid to compensate the taxpayer for the inconvenience suffered as a result of being required to be away from their usual place of residence during those hours.

Subsection 15-2(1) of the ITAA 1997 provides that the assessable income of a taxpayer includes the value of allowances paid in respect of employment.

However, if a sleepover allowance paid is properly characterised as a living-away-from-home allowance, the sleepover allowance will be a fringe benefit within the meaning of subsection 30(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). Fringe benefits are non-assessable non-exempt income in the hands of the taxpayer under subsection 23L(1) of the Income Tax Assessment Act 1936 (ITAA 1936).

Subsection 30(1) of the FBTAA provides that where an employer pays an allowance to an employee as compensation for additional non-deductible expenses incurred or other additional disadvantages due to living away from their normal place of residence to perform the duties of employment, the allowance constitutes a benefit provided by the employer to employee.

Paragraph 38 of Miscellaneous Taxation Ruling MT 2030 discusses the meaning of living-away-from-home allowance and states that: 'A living-away-from-home allowance is paid where the employee has moved and taken up temporary residence away from his or her usual place of residence so as to be able to carry out employment duties for a time at the new (but temporary) workplace.'

The sleepover allowance is paid as compensation for the inconvenience the taxpayer suffered as a result of occasionally spending the night at a client's residence. The allowance is not a living-away-from-home allowance because: (a) it is not paid to compensate the taxpayer for additional expenses, and; (b) the taxpayer is not required to move to a temporary residence - that is, the taxpayer is not considered to be living away from their normal place of residence.

Consequently, the sleepover allowance is not a fringe benefit for the purposes of the FBTAA and therefore not non-assessable non-exempt income under subsection 23L(1) of the ITAA 1936. The allowance is therefore assessable under section 15-2(1) of the ITAA 1997. Note: If a LAFHA benefit was provided in relation to a period commencing before 1 October 2012, the benefit would only be a LAFHA benefit if the employee was required to live away from their 'usual place of residence'.

Date of amendment Part Comment 24 January Title Amended for clarity. Issue and Decision Replace para 26(e) of ITAA 1936 with s15-2 of ITAA 1997. Reasons for Decision Update reference to ss23L(1) of ITAA 1936 Replace para 26(e) of ITAA 1936 with s15-2 of ITAA 1997. Insert note re change in para 30(1)(b) of FBTAA from usual place of residence to normal place of residence. Legislative References Replace para 26(e) of ITAA 1936 with s15-2 of ITAA 1997. Related ATO IDs Replace para 26(e) of ITAA 1936 with s15-2 of ITAA 1997. Related ATO IDs Insert related ATO ID Keywords Insert additional keywords

Date of amendment | Part | Comment

24 January | Title | Amended for clarity.

Issue and Decision | Replace para 26(e) of ITAA 1936 with s15-2 of ITAA 1997.

Reasons for Decision | Update reference to ss23L(1) of ITAA 1936 Replace para 26(e) of ITAA 1936 with s15-2 of ITAA 1997. Insert note re change in para 30(1)(b) of FBTAA from usual place of residence to normal place of residence.

Legislative References | Replace para 26(e) of ITAA 1936 with s15-2 of ITAA 1997.

Related ATO IDs | Replace para 26(e) of ITAA 1936 with s15-2 of ITAA 1997.

Related ATO IDs | Insert related ATO ID

Keywords | Insert additional keywords