ap_reb02

Invalid relative tax offset

Tax offsets - what they do

Dependant tax offsets - invalid relative

Separate net income

Residence qualification

Partial tax offsets

Dependant tax offsets - an invalid relative is worth $603, but what is an invalid relative?

The term 'invalid relative' is defined at sec 159J(6) - there are 3 major characteristics:

Child,

brother or

sister

of taxpayer who is over the age of 16 and in receipt of

disability support pension,

special needs disability support pension (or equivalent rehabilitation allowance), or

certified as having a continuing inability to work by a medical officer or medical practitioner

Answer this question….

Would the following dependant qualify as an invalid relative?

Invalid pensioner uncle of taxpayer?

Yes No

Must be child, brother or sister

Answer this question….

Would the following dependant qualify as an invalid relative?

12 year old daughter of taxpayer certified as permanently incapacitated by Department of Health medical officer

Yes No

Must be over the age of 16

Refer to sec 159J(6) definition

Answer this question….

Would the following dependant qualify as an invalid relative?

Taxpayer's wife's 20 year old invalid pensioner brother? y/n

Yes No

Child, brother or sister of taxpayer

Separate net income

Section 159J(4) ignores the first $282 of a dependant's income.

However, for every $4 of income in excess of $282, it reduces the tax offset by $1.

Full details in the topic on separate net income

There is something of a Catch 22 operating with the separate net income restriction for invalid relative rebate. Can you see what it is?

Most of the eligible persons would be eligible for some kind of government assistance, which would be included in their separate net income, thus reducing the rebate substantially, if not completely

Residence qualification

Section 159H(1) says that the tax offsets described in sections 159H to 159Z (subdivision A) apply if, and only if, the taxpayer is a resident.

The dependant must also be a resident.

Section 159J(1) states that where a person contributes to the maintenance of a dependant specified in section 159J(2), and that dependant is a resident then he is entitled to a tax offset.

For further details, refer to the topic on residence requirements for rebates

Partial tax offsets

Section 159J(3) empowers the Commissioner to allow only so much of the tax offset as is 'reasonable in the circumstances.'

In practice this is done on a proportionate basis - for further details refer to the topic on partial offsets