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TT86/ 349 -351 and Commissioner of Taxation [1986] AATA 360 (13 November 1986)

Last Updated: 11 March 2009

ADMINISTRATIVE APPEALS TRIBUNAL

Income Tax - Sole parent rebate - de facto relationship - whether "special circumstances" exist.

Income Tax Assessment Act 1936 (Cth) – s 159J, s 159K.

86 ATC 370

TT86/ 349 -351

AAT Decision No 3204

Mr. P.M. Roach (Senior. Member)

13 November 1986 HOBART

ADMINISTRATIVE APPEALS TRIBUNAL ) No.
)
TAXATION APPEALS TRIBUNAL ) Re:

Applicant

And:

Respondent

REASONS FOR DECISION

Mr. P.M. Roach (Senior Member)

1. The Applicant claims the benefit of a "sole parent rebate" pursuant to section 159K(3)(a) of the Income Tax Assessment Act ("the Act"). A son was born to the Applicant on 21st December, 1967. Thereafter until 25th November, 1983 he was either a "child less than 16 years of age (not being a student)" or a "student" for concessional rebate purposes (cf. Section 159J(2)). The Applicant and the boy's father, her husband, separated on 3rd July 1981. In the words of the Applicant, thereafter "he had no involvement with his son and provided no financial support for him". That evidence was unchallenged and I accept it. It follows that on any view the Applicant thereon became and, until such time as there occurred a relevant change in her circumstances, would continue to be "a taxpayer (with) the sole care of " her son.

2. On 17th April 1982 the Applicant commenced cohabitation with another man who has since died. (I shall refer to him as "the Deceased"). The Applicant and the Deceased lived together until his death on 30 July 1984. They married on 9th June 1984. They lived "as husband and wife on a bona fide domestic basis although they were not legally married to each other". That being so, pursuant to section 159K (4) of the Act, the provisions of that section applied in relation to each of them "as if they were legally married to each other during that period". It is common ground that the Applicant was eligible for a sole parent rebate from 3rd July 1981 to 17th April 1982 and was not entitled after her son left school on 25th November, 1983.

3. As to the intermediate period, her evidence was that the Deceased contributed to the maintenance of his first family and that he only contributed $60 per week "board" and no more to the common household of the Deceased, the Applicant and her son; and that that household was maintained in premises of which she alone was the tenant. That evidence was not challenged and I accept it. Her further evidence was that the outgoings of the household for the trio were substantially in excess of $300 per week at all times and, more particularly, that throughout the period in question it was $324 to $326 per week - a figure which included unspecified amounts being repaid in respect of the principal of moneys borrowed. I am not persuaded that that evidence is to be accepted without reservation or qualification. However, even on a marginal cost basis as applied to the figures presented on behalf of the Applicant I am not persuaded that the financial contribution of the Deceased to the household was less than the additional costs occasioned by his presence there. Some costs such as food ($80 per week) would have been increased but other costs such as rental ($53-$55 per week) would not. On the other hand I accept that at all material times the only contibutors to household expenses were the Applicant and the Deceased and that the contributions of the Deceased were substantially less than one-half of total household expenses.

5. As to personal responsibility for the well-being and personal development of the Applicant's teenage son, I accept that the Deceased left such considerations and concerns essentially to the Applicant as the boy's natural mother. The association of the Deceased with the child was limited as to time because his working hours as a taxi operator substantially occupied the free time of the boy. Although the Deceased did not interfere in the Applicant's manner of attending to the upbringing of her son, I am satisfied that he was not indifferent to the well-being of the boy. He occasionally provided the boy with transport to cricket; he travelled with the boy and his mother to the nearest major city to enable the boy to participate in dancing competitions - a field of activity of personal interest to the Deceased; the trio travelled interstate on holidays; and the Applicant and the Deceased would discuss together what her son "had done" even though his future was considered to be essentially the responsibility of his mother.

6. In light of those findings the Applicant contends that she was "a taxpayer (with) the sole care of" her son and that, although by force of S 159K (4) she was deemed to be legally married to the Deceased and therefore not entitled to a rebate in the absence of special circumstances, such "special circumstances" did exist.

7. The section is difficult of construction and my own views have been expressed recently in case T45 (86 ATC 370 at 375). By Act No. 117 of 1975 a system of concessional rebates was introduced to succeed an earlier system providing for concessional deductions. One result of the change was that taxpayers who contributed to the maintenance of dependent children continued to benefit, although the benefit was to be by rebate instead of by deduction. Entitlement to the rebate on that account was later abolished. The 1975 legislation also introduced a new concept, referred to in the marginal note as "sole parent rebate" as defined by section 159K. For reasons more fully expressed in case T45 I then concluded, and I now confirm, that the concept of "sole parent" related to those who stand alone in caring for one or more children rather than to those who contribute financially to the maintenance of a child. The Applicant was such a lone parent from the time of her separation from her husband - the father of the boy - until such time as she commenced cohabitation with the Deceased. From that date her circumstances were to be assessed as if she had married the Deceased on the date cohabitation commenced.

8. The essence Of the Applicant's argument is that if one spouse leaves to the other the burden of the responsibility for the upbringing of the children of one or both of them or contributes substantially less than an equal share to the cost of maintaining a common household (or both), then there are "special circumstances" which entitle the other spouse to the "sole parent rebate." I reject that.

9. To be entitled the Applicant must first satisfy me that she had "sole care" of her son. In the circumstances defined by the findings of fact I have made, I am not so satisfied. She was not "alone" in providing for her son. She had the support of a "spouse" with whom she shared her home and he was not indifferent to the well-being of the boy or indifferent to the Applicant's responsibilities and concerns as mother of the boy, although I do accept that he left the burden of responsibility to her; something not at all uncommon in family life. Further, even if "sole care" only took into account financial responsibility, I am not satisfied that the contributions of the Deceased to the household did not ease the financial burden for the applicant of providing for her son and herself.

10. I affirm the decision of the Commissioner upon the objections of the Applicant for the year of income ended 30 June 1982-84 (inclusive).