Assessability of attendant care allowance paid under the Safety Rehabilitation and Compensation Act 1988

Is an attendant care allowance paid to a taxpayer by the Commonwealth Department of Veterans' Affairs in accordance with section 29 of the Safety Rehabilitation and Compensation Act 1988 (SRCA), assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Yes. The attendant care allowance received by the taxpayer from the Commonwealth Department of Veterans' Affairs for providing attendant care services are included in their assessable income under section 6-5 of the ITAA 1997.

The Commonwealth Department of Veterans' Affairs pays an attendant care allowance to the taxpayer in accordance with section 29 of the SRCA.

The allowance is paid monthly for attendant care services provided by the taxpayer for their spouse.

Section 6-5 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.

However, subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income then it is not assessable income.

Ordinary income has generally been held to include three categories, namely, income from rendering personal service, income from property and income from carrying on a business.

As the regular periodical amounts received by the taxpayer are payments for personal services they have rendered in caring for their spouse, they are income according to ordinary concepts and therefore ordinary income.

Subdivision 52-B of the ITAA 1997 exempts from income tax an attendant allowance paid under section 98 of the Veterans' Entitlements Act 1986 (VEA). An attendance allowance that is paid under that provision is for specific war-caused injuries or war-caused diseases payable to a veteran who is entitled to a veterans' pension under Part II of the VEA.

Although the taxpayer receives an attendant care allowance from the Commonwealth Department of Veterans' Affairs, the allowance is paid under section 29 of the SRCA not section 98 of the VEA. There is no corresponding provision in the Income Tax Assessment Act 1936 or ITAA 1997 that exempts an attendant care allowance paid under section 29 of the SRCA. The attendant care allowance received by the taxpayer is therefore assessable income under section 6-5 of the ITAA 1997.

Date of Amendment Part Comment 27 February 2015 Reasons for Decision Minor grammatical amendment

Date of Amendment | Part | Comment

27 February 2015 | Reasons for Decision | Minor grammatical amendment