Housekeeper Tax Offset - both spouses working

Is the taxpayer entitled to a housekeeper tax offset under section 159L of the Income Tax Assessment Act 1936 (ITAA 1936) where a housekeeper was hired to care for the taxpayer's child while they were at work?

No. A housekeeper tax offset is not allowable under section 159L of the ITAA 1936 where a housekeeper was hired to care for the taxpayer's child while they were at work as no special circumstances exist as required by subsection 159L(4) of the ITAA 1936.

The taxpayer and the taxpayer's spouse work full-time.

The taxpayer hired a housekeeper to care for their child, who is under 21 years of age, whilst the taxpayer and spouse were at work.

The taxpayer was not entitled for the Part B rate of the family tax benefit.

Subsection 159L(1) of the ITAA 1936 allows a tax offset where a housekeeper is wholly engaged in keeping house in Australia for a taxpayer and who cares for: • a child of the taxpayer less than 21 years of age; • a child, whether or not a student, under 21 years of age and the taxpayer is entitled to a notional rebate for that child; • an invalid relative for whom the taxpayer is entitled to a dependants tax offset; or • the spouse of the taxpayer who is in receipt of a disability support pension under the Social Security Act 1991 (SSA 1991).

For a taxpayer with a spouse to be entitled to a housekeeper tax offset, special circumstances must exist - unless the care is for the spouse of the taxpayer who is in receipt of a disability support pension under the SSA 1991 (subsection 159L(4) of the ITAA 1936).

Special circumstances include where: • one partner to a marriage is deserted by the other and is obliged to engage a housekeeper to care for the children and attend to household duties when he/she goes out to work. • a taxpayer had an extremely busy public life as a politician ( Case J70 77 ATC 579; (1977) 22 CTBR (NS) Case 20 ), and • a taxpayer had a severely retarded child who needed constant attention ( Case M83 80 ATC 613; (1980) 24 CTBR (NS) Case 58 ).

The taxpayer engaged a housekeeper to care for the taxpayer's child while the taxpayer and their spouse were at work. Although the housekeeper performed child-minding duties and domestic duties while the taxpayer and their spouse were at work, it could not be said that special circumstances exist to entitle the taxpayer a housekeeper tax offset. Accordingly, the taxpayer is not entitled to a housekeeper tax offset under section 159L of the ITAA 1936. Note 1 From 1 October 2010 new rules apply under section 159LA of the ITAA 1936 such that a taxpayer is not entitled to a tax offset in respect of a housekeeper, if the taxpayer does not contribute to the maintenance of a spouse in receipt of a disability support pension under the SSA 1991 and either or both of the following apply; • the taxpayer is a member of a family tax benefit (Part B) family without shared care; • parental leave pay is payable under the Paid Parental Leave Act 2010 to the taxpayer, or to the taxpayer's spouse while being the taxpayer's partner. Note 2 A taxpayer is not entitled by virtue of subsection 159L(3B) of the ITAA 1936 to claim the housekeeper tax offset: • For the 2008-2009 income year if the taxpayer's taxable income for the year is more than $150,000; • For the 2009-2010 and later income years if the sum of the adjusted taxable incomes of the taxpayer and spouse exceed the income limit for FTB - Part B for the year.