Assessability of maintenance payments

Is the taxpayer assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) on maintenance payments?

No. The taxpayer is not assessable under section 6-5 of the ITAA 1997 on maintenance payments as the payments are exempt from tax under section 51-1 of the ITAA 1997.

The taxpayer receives regular maintenance payments.

These payments are paid by an individual who had been the taxpayer's spouse.

Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.

An amount will not be included in assessable income if the amount is exempt income (subsection 6-15(2) of the ITAA 1997).

Section 51-1 of the ITAA 1997 provides that certain listed amounts will be exempt from income tax. Item 5.1 of section 51-30 of the ITAA 1997 includes in the list periodic payments in the nature of maintenance that meet the requirements of section 51-50 of the ITAA 1997.

Section 51-50 of the ITAA 1997 sets out the conditions on which a periodic payment to a spouse or child which is in the nature of maintenance is exempt from tax. That section provides that the maintenance payment is exempt from income tax only if it is made; • by an individual ( the maintenance payer) or is attributable to a payment made by the maintenance payer ; and • to an individual who is or has been the maintenance payer's spouse; or • to or for the benefit of an individual who is or has been, - a child of the maintenance payer; or - a child who is or has been a child of an individual who is or has been a spouse of the maintenance payer.

The taxpayer receives regular maintenance payments from an individual who had been their spouse. This payment is exempt from income tax in accordance with section 51-50 of the ITAA 1997 and therefore is not assessable income under section 6-5 of the ITAA 1997.