Issue
Is a taxpayer entitled to a dependent spouse (with child) tax offset after 1 July 2000 under section 159J of the Income Tax Assessment Act 1936 (ITAA 1936) when they are in receipt of family tax benefits at the Part B rate?
Decision
No. A taxpayer is not entitled to a dependent spouse (with child) tax offset after 1 July 2000 under section 159J of the ITAA 1936 when they are in receipt of family tax benefits at the Part B rate.
Facts
The taxpayer supported his spouse and child for part of the income year.
The taxpayer received Part A and Part B family tax benefit payments from Medicare offices throughout the income year.
Reasons for Decision
Subsection 159J(1) of the ITAA 1936 provides that a tax offset is available to a taxpayer where that taxpayer contributes to the maintenance of an Australian resident dependant.
However, subsection 159J(1AA) of the ITAA 1936 removes this entitlement where the taxpayer, or taxpayer's spouse was entitled to the family tax benefit at the Part B rate within the meaning of the A New Tax System (Family Assistance) Act 1999.
The taxpayer has received family tax benefit payments at the Part B rate from Medicare. Therefore, subsection 159J(1AA) of the ITAA 1936 operates to remove the taxpayer's entitlement to the dependant spouse (with child) tax offset under section 159J.