Home-buying stroke victim may be hit with tax bill

A former teacher placed in a nursing home in her late 20s after two strokes may be taxed for living in her own home.

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

A former teacher who had two strokes and was placed in a nursing home in her late 20s may be blocked from moving into her own house because the tax office wants to treat her as a disability service provider and claim some of her support funding.

Kirby Littley, 32, is one of the few National Disability Insurance Scheme participants to have been granted housing funding for specialist disability accommo­dation and, together with a bank loan and equity in a house she bought before her illness, is close to settling on a new apartment.

Her family has now been told that because Ms Littley is not just the recipient of the funding but the owner of the home, she would be treated as a service provider for tax purposes. The home will be her principal place of residence but also classed as an investment property.

“She cannot afford the repayments if her SDA funding is taxed, which also means Centrelink will treat that funding as income and she will lose her disability pension,” her mother, Carol Littley, told The Australian. “Kirby is a trailblazer but the stress this is putting on our family is so hard. This feels like policy on the run.”

Under the NDIS, about $700 million each year will be available on top of participant plans for housing support.

Currently, most people receiving this funding pay it to a separate service provider to live in a house that provider owns. Renting this way does not affect people with disability.

Several SDA recipients, however, have chosen to use the funds to help buy property. The Australian understands the Australian Taxation Office has made a private ruling concerning at least one other woman and is considering a public ruling on the matter.

“They’ve known about this issue for some time now and we need to fix it, not just for Kirby but all the others like her,” Carol Littley said. “We already had contracts with the developer of Kirby’s apartment and if they weren’t so understanding, we may have been penalised if Kirby had to pull out.”

Ms Littley’s one-bedroom apartment in Victoria is more expensive than most apartments because it is built specifically to accommodate her and the equipment and modifications she needs to be fully supported.

An ATO spokesman said it had “not issued a ruling on this topic”.

The ATO has issued no public or class ruling on the issue, either, which means people affected by the matter would need to seek their own private response.

“We are in our 60s. If anything happens, we need to know Kirby will be safe,” Carol Littley said.