Tax relief for live-in supporters could save $260 million and deliver better lives for people with disability.

It doesn’t sound revolutionary: one person with disability, one live-in supporter, living together in a home.

But this model (called Individualised Living Arrangements, or ILA’s) might hold the key to a more sustainable NDIS. It’s cheaper than group homes. It’s tailored to individual needs. And it helps build real, personal relationships—something no shift-based roster can replicate.

The trouble is, Australia hasn’t made ILAs easy.

A new report from KPMG, developed with input from the Summer Foundation, finds ILAs are being held back by bad incentives. Right now, live-in supporters face complicated, unclear tax treatment. They’re expected to keep detailed records and calculate partial deductions. Most people’s takeaway? Don’t bother.

KPMG wants that changed. Its report recommends adopting a UK-style safe harbour tax exemption for live-in supporters - effectively making modest payments tax-free. The benefits could be substantial.

According to the Summer Foundation, just 500 more people moving into ILAs each year could save up to $260 million over five years.

“This isn’t about handouts,” says KPMG’s Head of Tax Policy Alia Lum. “It’s about recognising the value of real human connection, and designing the tax system to support it.”

Right now, only 520 NDIS participants are living in ILAs. But with over 40,000 Australians with high support needs, there’s enormous room to grow.

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Tax Simplicity for Supporters, Better Outcomes for Participants

The current tax system treats live-in supporters like small businesses. They’re expected to track utility usage, assign percentages to shared spaces, and justify deductions—often for payments that barely cover costs. That’s not how you build a sustainable support model.

KPMG’s solution is simple: a fixed tax-free threshold, with income above that treated normally. No itemised expenses. No bureaucratic burden. Just a straightforward incentive for people to offer meaningful support at home.

It works in the UK. It works in Canada. And it could work here—if the policy settings catch up.

The Summer Foundation says the case is clear: ILAs are cheaper, more flexible, and deliver better outcomes than traditional group homes. They give participants more control and foster the kinds of enduring, personalised relationships that institutional models can’t.

But as Summer Foundation’s Jessica Walker puts it, the tax code is sending the wrong signal: “Voluntary live-in supporters should be granted recognition—through fair, tax-free treatment that reflects their vital contribution.”

Right now, Australia lags behind. While over 10,000 people in the UK live in ILA-style arrangements, just 520 do so here. And yet thousands more are eligible.

The report recommends aligning Australia’s tax system with the human-centred logic of ILAs. That means simple eligibility rules, a safe harbour for tax-free income, and a commitment to backing living arrangements that actually work.

With NDIS sustainability under pressure, this is one lever worth pulling.