ATO waives taxes for home buyers on NDIS

The tax office has rewritten its own advice on how to treat National Disability Insurance Scheme housing payments.

Kirby Littley is moving into bespoke housing to meet her disability needs. Picture: Peter Ristevski

The tax office has rewritten its own advice on how to treat National Disability Insurance Scheme housing payments in response to the case of a young disabled woman who was set to be slugged as a service provider.

The Australian revealed a relic of the tax system exposing the case of Kirby Littley, 32, who was poised to sign a bank loan and buy her own apartment with NDIS funds before being told she would be taxed as both a provider of accommodation and a recipient of support.

Yesterday, Ms Littley’s mother, Carol, received an email from Australian Taxation Office director Michael Majoor explaining the situation had now been fixed not just for Kirby but for others in her position who would follow.

“The ATO has just formed an opinion that the (specialist disability accommodation) SDA benefit the taxpayer receives and is entitled to as a participant with an approved plan, is an NDIS amount which is exempt from tax where the taxpayer is the provider and participant — this being the situation that applies to Kirby,” Mr Manjoor said.

“This accords with the policy intent as noted in the Explanatory Memorandum to the National Disability Insurance Scheme Legislation Amendment Bill 2013.

“Unfortunately, at the time the ATO advised (the) Department of Social Services that the SDA was assessable, the SDA had not yet matured sufficiently to provide a different outcome. The ATO is updating the DSS and also updating the information it has on the NDIS on its web page. Now go and get that bank loan sorted out.”

Mr Manjoor added a personal touch: “You are very brave parents who are doing a lot of trailblazing for Kirby and other NDIS participants.”

Assistant Minister for Disability Services Sarah Henderson, the Littley family’s local MP, moved to intervene in the case after it appeared in The Australian and said the issue was a “top priority” for her.

Under the NDIS, about $700 million each year is made available to a fraction of participants who cannot live in the community without significant, often around-the-clock, support.

Kirby Littley was a special school teacher and had her own mortgage when she had two strokes at 28 and was sent to a nursing home for rehabilitation because there was nowhere else for her to go.

Now she is ready to buy her own apartment, with the annual SDA funding helping her to make the repayments.

“I am so overwhelmed, not just for Kirby but for the others this will help,” Carol Littley said.