Issue
Is the taxpayer entitled to claim the First Child Tax Offset (Baby Bonus) under section 61-355 of the Income Tax Assessment Act 1997 (ITAA 1997) for a child for which they are not legally responsible?
Decision
No, the taxpayer is not able to claim the First Child Tax Offset (Baby Bonus) under section 61-355 of the ITAA 1997 for a child for which they are not legally responsible.
Facts
The taxpayer began caring for a child, on the death of the child's parent, after 1 July 2001.
The child is under 5 years of age.
The taxpayer has not adopted the child and does not have any other court order giving them legal responsibility for the child.
Reasons for Decision
Section 61-355 of the ITAA 1997 provides entitlement to the First Child Tax Offset, known as the Baby Bonus, where certain conditions are met. If a taxpayer meets these conditions, they are taken to have primary entitlement to the Baby Bonus for the child in question at that time.
Subsection 61-355(3) of the ITAA 1997 sets out the conditions which need to be met in order to be eligible to claim the Baby Bonus. Firstly, under paragraph 61-355(3)(a) of the ITAA 1997, a child event must have happened. Section 61-360 of the ITAA 1997 provides that a child event happens at a particular time, called the event time, if: • the person becomes legally responsible for a child at the event time • the event time is on or after 1 July 2001 • the person is an Australian resident at the event time • the person was not legally responsible for the child at any time before 1 July 2001, and • there is no other person who is also legally responsible for the child at the event time and who was legally responsible for the child at any time before 1 July 2001.
The term legally responsible means that the person is responsible (whether alone or with someone else) for the day-to-day care, welfare and development of the child and the person is also either the natural parent or the adoptive parent, or they have a court order (for example, a parenting order) saying that they are otherwise legally responsible for the child.
Although the taxpayer cares for the child, they do not have legal responsibility for the child. As a child event has not happened, the taxpayer has not met the condition in paragraph 61-355(3)(a) of the ITAA 1997. Therefore, they are not entitled to the Baby Bonus.