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CASE 31/96

Members:
SA Forgie DP
KM Beddoe SM
J Horrigan M

Tribunal:
Administrative Appeals Tribunal

Decision date: 11 April 1996

SA Forgie (Deputy President), SM Beddoe (Senior Member) and J Horrigan (Member)

On 29 July, 1994, the applicant lodged an application for review of a decision by a Deputy Commissioner of Taxation in respect of an objection against an assessment under the Income Tax Assessment Act 1936 (``the Act'') for the year ended 30 June, 1993 (``the year of income''). That decision was dated 1 June, 1994.

2. At the hearing, the applicant was represented by Mr Russell QC and the Commissioner of Taxation (``the Commissioner'') by Mr McGill S.C.. The documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (``the T documents'') were admitted in evidence together with a statement of agreed facts (to which was attached a copy of the trust deed for the MLC Superannuation Fund) and Circular 8 issued by the Insurance and Superannuation Commissioner (``the ISC'').

The issue

3. The sole issue in this case is whether the applicant is an eligible person as defined by sub-section 82AAS(2) of the Act in relation to the year of income. There is no issue as to the quantum of the deduction claimed by the taxpayer. Although additional tax by way of a penalty was initially included in the notice of assessment, the applicant's objection in respect of that has been allowed and additional tax is not an issue in these proceedings.

Background

4. The facts forming the background to the issues which we must decide were agreed upon between the parties and set out in a statement (Exhibit A). We have accepted that statement and will set out those facts.

5. During the year of income, the applicant was a director of a research corporation (``the Corporation''), which paid him director's fees totalling $13,075.00. Those fees exceeded 10% of his assessable income in the year of income.

6. In respect of the same year of income, the Corporation also made in relation to the applicant a contribution of $746.84 to the MLC Master Trust Superannuation Fund (``the MLC Fund''). That contribution was applied wholly towards the provision of death benefits in respect of the applicant in accordance with the trust deed of the MLC Universal Directors' Insurance Plan (``the Plan''). In the event of his death, the Plan provides that the benefits attributable to the Corporation's contributions are payable only to the legal personal representative of the applicant.

7. During the same year of income, the applicant contributed the sum of $36,920.00 to a different superannuation fund, which we will call the ``Applicant's Fund''. No part of that contribution is deemed by section 27D of the Act to have been expended in making a payment as mentioned in paragraph 27A(12)(a) of the Act. The applicant made the contribution in order to obtain superannuation benefits for the applicant or for his dependants in the event of his death.

8. The Applicant's Fund was a complying superannuation fund for the purpose of section 82AAT of the Act for the year of income. The applicant gave a notice under sub-section 82AAT(1A) of that Act in respect of the contribution of $36,920.00 and the trustee of the fund acknowledged that notice under the same sub-section.

9. In his taxation return for the year of income, the applicant claimed a deduction, calculated in accordance with sub-section 82AAT of the Act, in respect of the contribution of $36,920.00 to the Applicant's Fund. His claim was disallowed in an assessment notified on 4 February, 1994. The applicant objected to the disallowance of his claim by a written notice dated 5 April, 1994. His objection was disallowed on 1 June, 1994 and led to his lodging his application for review in this tribunal.

10. As we have already stated, the parties agreed that the issue turned upon whether the applicant was an eligible person, as defined in sub-section 82AAS(2) of the Act, during the year of income. He would be an eligible person unless, during the whole or part of the year of income, circumstances existed by reason of which it was reasonable to expect that, in the event of his death, superannuation benefits would be provided for his dependants by a payment of benefits pursuant to the Plan.

11. It was also agreed between the parties that, during at least a part of the year of income, circumstances existed by reason of which it was reasonable to expect that, in the event of the applicant's death, a sum of money would be payable in accordance with the Plan to the personal representative of the applicant. The extent to which any such payment would have

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been attributable to the year of income, it would have been wholly or partly attributable to the contribution of $746.84 made to the MLC Fund for the provision of death benefits in respect of the applicant in accordance with the Plan.

12. During at least a part of the year of income, circumstances existed by reason of which it was reasonable to expect that the consequence of the payment of such a sum to the applicant's legal personal representative would be that one or more of the persons who were his dependants for the purposes of section 82AAS(2) of that Act would receive a greater amount on the distribution of the applicant's estate than he or she would have received had that sum of $746.84 not been paid to the MLC Fund.

Legislative background

13.  Section 82AAT of the Act provides that:

``A person who has made a contribution to a fund during a year of income is entitled to an allowable deduction for the contribution in the person's assessment for the year of income if all the following conditions are met:

  • (a) the person is an eligible person in relation to the year of income;
  • (b) the person made the contribution in order to obtain superannuation benefits for the person or for dependants of the person in the event of the person's death;
  • (c) the fund is a complying superannuation fund for the fund's year of income in which the person made the contribution;
  • (d) the person has given a notice under subsection (1A) in respect of the contribution and the trustee of the fund has acknowledged that notice under subsection (1A).

The deduction cannot be more than the amount covered by the notice under subsection (1A), and is also subject to the limits in subsection (2).''

14. In relation to the year of income with which we are concerned, sub-section 82AAT(2) read:

``The total of the deductions allowable to a taxpayer under this section for a year of income must not exceed the lesser of the following:

  • (a) the sum of:
    • (i) $3,000; and
    • (ii) 75% of the amount (if any) by which the total amount of the contributions exceeds $3,000;
  • (b) the amount ascertained in accordance with the regulations as the taxpayer's maximum deductible contributions for the year of income.''

15. What is meant by an ``eligible person'' is defined in sub-section 82AAS(1) by reference to sub-section 82AAS(2) . It provides:

``A person (in this subsection referred to as the `relevant person' ) is an eligible person in relation to a year of income for the purposes of this Subdivision unless:

  • (a) during the whole or a part of the year of income circumstances existed by reason of which it was reasonable to expect that superannuation benefits would be provided for the relevant person in the event of the retirement of the relevant person or for dependants of the relevant person in the event of the death of the relevant person (whether or not any condition other than the retirement or death of the relevant person would be required to be satisfied in order that those benefits be provided); and
  • (b) to the extent to which those benefits would be attributable to the year of income:
    • (i) the benefits would be wholly or partly attributable to contributions made to a superannuation fund in relation to the relevant person by a person other than the relevant person; or
    • (ii) the benefits would, in whole or in part, be paid out of moneys that would not represent:
      • (A) contributions made by the relevant person to a superannuation fund; or
      • (B) contributions made by the relevant person under a scheme for the payment of benefits upon retirement or death, being a scheme constituted by or under a

        ATC 356

        law of the Commonwealth or of a State or Territory; or
      • (C) income or accretions arising from contributions referred to in sub-subparagraph (A) or (B); or
      • (D) income or accretions arising from contributions made to a superannuation fund in relation to the relevant person by a person other than the relevant person during an earlier year of income, where there is no reasonable likelihood that any such contributions will be made at any time after the beginning of the first-mentioned year of income.''

16. It was agreed between the parties that, were we to find that the applicant does not come within the terms of paragraph 82AAS(2)(a) , he is also not within the terms of paragraph 82AAS(2)(b) .

17. The operation of sub-section 82AAS(2) is qualified by the remaining provisions of section 82AAS . Of particular concern in this case are the qualifications found in sub- sections 82AAS(3) and (4) . Sub-section 82AAS(3) provides that:

``If:

  • (a) during a period, or a combination of periods, in a year of income, a person was engaged in particular eligible employment; and
  • (b) either:
    • (i) both:
      • (A) the person's assessable income, or the person's exempt income, of the year of income includes one or more amounts that were derived from that eligible employment; and
      • (B) the total of the amounts mentioned in sub-subparagraph (A) is less than 10% of the person's assessable income of the year of income; or
    • (ii) the person's assessable income, or the person's exempt income, of the year of income does not include any amount that was derived from that eligible employment;

a reference in subsection (2) to superannuation benefits does not include a reference to superannuation benefits to the extent to which:

  • (c) they would be attributable to, or paid out of money representing:
    • (i) contributions made in relation to the person in connection with that eligible employment; or
    • (ii) income or accretions arising from such contributions; or
  • (d) they would otherwise be attributable to that eligible employment.''

18. The term ``superannuation benefits'' is defined in sub-section 6(1) of the Act to mean ``... individual personal benefits, pensions or retiring allowances;''.

A summary of the submissions

19. Mr Russell submitted, there are three matters to be determined in considering the issue in this case. Those three matters are concerned with reasonable expectation, the meaning of ``superannuation benefits'' and whether superannuation benefits would be provided for the dependants of the applicant. He submitted that these three matters had been correctly analysed by Tax Board of Review No. 3 in Case T32,
86 ATC 291.

20. In light of the analysis in that case, Mr Russell submitted that, in the event that the applicant had died, his estate would have been increased by the amount of the payment under the Plan. That amount would have been paid to the applicant's personal representative and, through him or her, to the beneficiaries under his will. Mr Russell submitted, however, that the nexus between the payment made under the Plan to the personal representative and any payment received by the applicant's dependants is too tenuous and the payment can no longer be characterised as a superannuation benefit.

21. A superannuation benefit is not any amount payable by way of benefit for some person. The amount must in some way be characterised as a superannuation benefit before any question of a reasonable expectation can arise. There must at least be a beneficiary and a trustee, a legal entitlement to receive money and that entitlement must arise because the person is a dependant. None of these characteristics, Mr Russell submitted, existed in this case. The reference to ``individual personal benefits'' makes it clear that the receipt of the payment by a personal representative is not enough.

ATC 357

22. The applicant also submits that payment must be in the context of a benefit arising from a superannuation scheme and not simply the augmentation of an estate. A person who is a beneficiary under a will and who receives an increased amount as his or her share of the estate after the proceeds of a life insurance policy are paid to the estate is not said to have received a superannuation benefit as a result of the payment of the life insurance policy. The person receiving the payments as superannuation benefits must receive them as beneficiaries of the trust deed establishing the superannuation fund.

23. Mr McGill submitted that Case T32 expresses too narrow a view of paragraph 82AAS(2)(a) . He said that, at the basis of the relevant provisions in the Act, was the premiss that persons employed by others had the advantage of superannuation benefits. In general, deductibility of personal contributions was provided for those not in employment. Deductibility of personal contributions was only permitted for those whose employment contributed to less than 10% of their assessable income during the year of income. No regard was paid by the provisions to cyclical factors and no regard was paid to whether the application of the provisions is fair in a particular case.

24. It was wrong, Mr McGill submitted, to see the construction of paragraph 82AAS(2)(a) in terms of benefits payable to dependants. The relevant test is whether superannuation benefits would be provided for the taxpayer's dependants in the event of his death. This is a wider test than whether the benefits would be payable to those dependants. Superannuation benefits can be provided for the benefit of dependants in ways other than by direct payment to them. There is no need to have a direct relationship of trustee and beneficiary between the superannuation fund and the dependant. All that is required is that the benefits would be paid to the dependant and there is no requirement that they be paid directly to him or her. There is no requirement in paragraph 82AAS(2)(a) that the money actually received by beneficiaries be received in the character of superannuation benefits.

25. Mr McGill submitted that paragraph 82AAS(2)(a) must be read as if the relevant event, in this case the death of the taxpayer, had already occurred. In considering what it is reasonable to expect, regard is had to the consequences in the circumstances of that event's having occurred. This was perhaps not clear from the paragraph in the form in which it was considered in Case T32. It is not to the point, therefore, to say that the applicant could have changed his will or become insolvent for such a circumstance is not supported by any relevant fact in the year of income.

26. The general concept of superannuation was considered by the High Court in
Mahoney v Commissioner of Taxation (1967) 41 ALJR 232. It was recognised by Kitto J in that case that the ordinary meaning of superannuation extends to benefits payable on death to a person's estate to persons for whom he or she may have had some responsibility. Therefore, the idea that an amount is payable to a taxpayer's estate does not take the payment outside the ordinary concepts of a superannuation benefit.

27. Mr McGill referred to paragraph 9 on page 83 of the trust deed of the MLC Fund where the Plan was noted as one of the four plans comprising the MLC Universal Superannuation Scheme and also to paragraph 9 on page 92. Paragraph 11 on page 93 provides that contributions paid towards the provision of death benefits are payable to the legal personal representative of the member. That paragraph appeared to have been drafted in light of the decision in Case T32.

28. Mr McGill referred to the case of
FC of T v McCabe 90 ATC 4968. The question for determination was whether it was reasonable to expect that a contract would not be renewed. Only if that were so would a deduction be available. While the case was concerned with paragraph 82AAS(2)(a) as it existed prior to the amendments in 1992, its approach regarding the reasonable expectation test is still applicable. At page 4,972, Davies J said that the test is considered on an objective, and not subjective, basis. In applying the test objectively, it was still possible to look at the subjective intention of the taxpayer.

29. Mr McGill referred to the case of
FC of T v Arklay 89 ATC 4563 and said that the circumstances of this case are precisely the same as those to which the Federal Court referred at page 4,567. At that page, the Full Court of the Federal Court said:

``We are of the opinion that the phrase with which we are concerned in the context of

ATC 358

sec. 82AAS of the Act requires a determination whether or not circumstances exist by reason of which the decision-maker is able to expect on reasonable grounds that superannuation benefits would be provided as stipulated in the section. That test is an objective one. However, in applying the test the decision-maker, in considering the circumstances, should have regard to any relevant matters concerning the taxpayer personally. Put another way our understanding of the meaning of the expression is one which involves the application of an objective test, but, as one of the concomitant elements of that test, the subjective intentions of the taxpayer may be relevant.

An example of an objective test which nevertheless accommodates the subjective intentions of a particular person is to be found under the Social Security Act 1947; cf. the decision of the Full Court of this Court in
Secretary, Department of Social Security v Copping & Anor (1987) ASSC ¶92-099 at pp. 90,327-90,328; (1987) 73 ALR 343 at p. 348 and see Dineen v Secretary, Department of Social Security (Federal Court of Australia, Woodward J. 6 December 1988, unreported) [17 ALD 91].''

30. Finally, Mr McGill submitted that sub- section 82AAS(4) was a reason for not attributing an unduly narrow interpretation to paragraph 82AAS(2)(a) . As Mr Russell had correctly pointed out, he said, a payment by an employer of a superannuation guarantee charge in relation to an employee of the type referred to in sub-section 82AAT(4) triggers the operation of sub-section 82AAT(2) . It would be unfair if a taxpayer who could persuade his or her employer to pay the contribution to a fund from which the payment would be made to his or her estate would be in a position different from that of a taxpayer whose employer paid the contribution to a fund from which the payment would be made directly to his or her dependants.

31. Mr Russell saw anomalies whether a wider or narrower interpretation were adopted. If, he said, a taxpayer had bequeathed all of his or her estate to charity, then the wider interpretation would mean that he or she would not be disentitled by virtue of the operation of paragraph 82AAS(2)(a) .

Consideration

32. We agree with Mr Russell and Mr McGill that there are three questions to be considered before we may resolve the issue in this case. The first of those questions relates to the meaning which should be given to the words ``superannuation benefit'' as they are used in paragraph 82AAS(2)(a) . In considering this opinion we have looked at the case of Mahoney as well as those such as Case 70,
(1973) 18 C.T.B.R. (N.S.) 544 and
Scott v Commissioner of Taxation (Cth) (No. 2) (1966) 40 ALJR 265 which considered the meaning of a ``superannuation fund''. We have also considered the case of
Meulman and Others v OTC Ltd (1990) 96 ALR 230 in which Bryson J considered the meaning of the words ``superannuation benefits''. As helpful as these cases are, we consider that we must look to the definition of ``superannuation benefits'' in sub- section 6(1) of the Act as well as to paragraph 82AAS(2) itself. Having done that, we find nothing that persuades us that we should do other than to apply the meaning given in sub- section 6(1) . Therefore, superannuation benefits are, in the context of paragraph 82AAS(2) individual personal benefits, pension or retiring allowances payable in the event of the taxpayer's retirement or death and provided for the taxpayer, in the case of retirement, or for his or her dependants in the case of death.

33. What is meant by the words ``provided for'' in this context? The superannuation benefits must be ``provided for'' the taxpayer or ``provided for'' the taxpayer's dependants. The ordinary meaning of the word ``provide'', when used as a transitive verb as it is in the paragraph and in so far as it is relevant in this case, is

``... ` 6 v.t. Supply or furnish for use; make available; yield, afford...' (see New Shorter Oxford Dictionary and see also the Macquarie Dictionary).''

34. In the context of paragraph 82AAS(2)(a) there seems to us to be no reason why we should not adopt the ordinary meaning of the word. Therefore, in this case, we are concerned with whether it was reasonable to expect that superannuation benefits would be supplied to, or furnished for the use of, the applicant's dependants in the event of his death.

35. We will consider that question in the light of the principles set out in Arklay's case which we have set out in paragraph 29 above and to

ATC 359

the comments of Davies J when he said in McCabe's case:

``The words `reasonable to expect' are not ambiguous and it is undesirable to paraphrase them or to use other words. In particular, they are words appropriate to the task of making an assessment as to the future. It is not useful to adopt other words. The adoption of words such as `probability' or `balance of probabilities' tend to introduce a concept or to have a connotation of proof, which may detract from the application of the section by an administrative decision-maker.''

(pages 4,971-4,972)

36. Both of these cases considered paragraph 82AAS(2)(a) in its form before it was amended by the Taxation Laws Amendment (Superannuation) Act 1992. At that time, paragraph 82AAS(2)(a) referred to a reasonable expectation that superannuation benefits would be provided for the relevant person upon retirement (or death)(rather than in the event of the retirement or death) of the relevant person. In our view, the subsequent change to the wording of the paragraph makes no difference to the applicability of the general principles to be applied.

37. Applying those principles to the applicant's case, it is reasonable to expect that, in the event that he had died during the year of income, a sum of money would have been payable under and in accordance with terms of the Plan. Would that sum of money have been a superannuation benefit? If it were to be a superannuation benefit, it would have had to be individual personal benefits, pensions or retiring allowances in order to come within the definition of superannuation benefits as defined in sub-section 6(1) . The sum of money clearly cannot amount to retiring allowances referred to in that definition for it is paid only on the applicant's death. It cannot be described as a ``pension''. The word ``pension'' has been considered in a number of cases. Several of those cases were considered in
Re Hammerton and Comcare (1995) 21 AAR 204 (at pages 216-218) by the Tribunal. It is apparent from those cases that, in its ordinary meaning, a pension comprises periodical payments. As the payment under the Plan could reasonably have been expected to be a one off lump sum payment, it would not be described as a pension.

38. That leaves open the question whether the lump sum payment would have been a superannuation benefit because it could be described as an individual personal benefit. A payment of money may be a benefit. The words ``individual'' and ``personal'' overlap in their ordinary meanings. In so far as the meanings are relevant, the New Shorter Oxford English Dictionary defines ``personal''

``A adj. II Of, pertaining to, concerning, or affecting a person as an individual (rather than as a member of a group or of the public, or in a professional capacity etc.); individual; private; one's own. lME b. Applicable or belonging only to... 4. Of, referring or tending to refer to, a person's character, private concerns, etc., esp. in a disparaging or offensive way. E17. b. Having oneself as object; directed to oneself. L18. c. Directed to or intended for a particular individual...''

39. The word ``individual'' is defined in the same dictionary to mean (again in so far as those meanings are relevant)

``A adj. 1 One in substance or essence; indivisible. 1ME-L17. 2. That cannot be separated; inseparable. L16-M17. 3 Existing as a separate indivisible identity; numerically one; single, as distinct from others of the same kind; particular. E17. b Identical, self-same. M17-E19. 4 Of, pertaining or peculiar to a single person or thing, rather than a group; characteristic of an individual. E17. b Intended to serve one person; designed to contain one portion...''

40. On occasion, the word ``individual'' has been interpreted not as referring to a single person or to single persons but to a group possessing a single common characteristic. This was so in
Cappid Pty Ltd v FC of T 71 ATC 4121; (1970-71) 127 C.L.R. 140. That was an appeal from Menzies J who had upheld the taxpayer's claim that it was a public company. Barwick C.J. with whom McTiernan, Windeyer and Owen JJ agreed, considered paragraph 103A(2)(c) of the Act. At that time, that paragraph provided that a company is a public company in relation to a year of income if

``... the company has not, at any time since its formation, been carried on for the purposes of profit or gain to its individual members and was, at all times during the year of income, prohibited by the terms of its constituent document from making any

ATC 360

distribution, whether in money, property or otherwise, to its members or to relatives of its members.''

41. At ATC page 4124; CLR page 153, Barwick C.J. said:

``The first and principal question to be decided is whether it has been established that the taxpayer has not at any time since its incorporation been carried on for the purposes of profit or gain to its individual members. As I have indicated, my brother answered this question in the affirmative because of his view of the meaning of s. 103A(2)(c). In my opinion, however, the function of the word `individual' in para. (c) is not to import the idea of `personal' or `beneficial' profit or gain. Its function, in my opinion, is to exclude from the operation of the paragraph those incorporated companies and unincorporated associations (see definition of `company' in s. 6(1)) which are carried on for the profit or gain of the membership as a whole and those which are carried on for the profit or gain of some specified person or body not being a member. Section 23(g) exempts from tax the income of certain bodies which are not carried on for the purposes of profit or gain to their individual members. The concept in this provision is of bodies, either corporated or unincorporated which are carried on for the benefit of their members but not for the profit or gain of their members severally or individually...''

42. It seems to us that this is the sense in which the word ``individual'' is used in the definition of ``superannuation benefits'' with which we are concerned. It is the sense which avoids a tautological meaning being given to the words ``individual'' and ``personal'' in the expression ``individual personal benefits''. At the same time, it is consistent with the notion that superannuation benefits are provided either by or for a person to make provision not only for him or her but also for those for whom he or she has a legal or moral responsibility. In the context of paragraph 82AAS(2)(a) the common characteristic of the single group of people for whom provision is made is that they be dependants of the taxpayer.

43. When the ordinary meaning of the word ``personal'' is taken into account, ``individual personal benefits'' are benefits for each person in the group having a single characteristic. When read in the context of paragraph 82AAS(2)(a) , superannuation benefits which are in the form of individual personal benefits are benefits provided for the taxpayer's dependants severally (i.e. for each of them). A payment of a sum of money may be such an individual personal benefit.

44. The fact that a payment of money may be an individual personal benefit does not lead automatically to the conclusion that a payment under the Plan in the event of the applicant's death would be an individual personal benefit provided for his dependants. That will depend on the basis and terms on which the payment is made. Paragraph 11 of the Plan provides that death benefits are payable to the legal personal representative of the member of the Plan. Paragraph 11 overrides the operation of paragraph 15.4 of the trust deed which would otherwise provide that payment be made or applied to one or more of the nominated beneficiaries of the member, his or her dependants or his or her legal personal representative. The result is that death benefits are payable to the member's personal representative regardless of whether he or she has dependants.

45. The applicant's legal personal representative is charged with the administration of his estate. He or she must distribute it in accordance with his will. It has already been agreed that the applicant's dependants are the residuary beneficiaries of his will. His dependants take in accordance with the provisions of his will. Although we do not have the applicant's will, it is reasonable to expect that, had he died, the dependants would have received their share of his estate only after the personal representative had carried out any specific bequests in the will and paid any debts owed by the estate. That is so because of their position as the residuary beneficiaries. They take what remains of the estate.

46. It follows that, while it has been agreed that the amount which the dependants may receive under the will could be augmented by the payment to the personal representative of the proceeds payable under the Plan, they would not receive directly the death benefits paid under the Plan. Once those benefits have been paid to the personal representative, they lose their character as death benefits and simply become money which is part of the applicant's estate. The dependants would receive only an

ATC 361

amount of money which includes all or, if the applicant's estate has considerable debts, some, of the amount of money paid as death benefits. That amount of money would represent the share of the estate to which he or she would be entitled by virtue of the terms of the will.

47. Were the applicant's estate to be distributed by a personal representative under the terms of a will, he or she would distribute to those people or bodies who have in common that they are named as beneficiaries in the will. That all or some of the people may also be his dependants is irrelevant to their entitlement to share in his estate. Therefore, had the death benefits been paid to the applicant's personal representatives, those death benefits would not have been supplied to, or furnished for the use of (i.e. provided for) his dependants. They would have been supplied to, or furnished for the use of (i.e. provided for) the personal representative to distribute to the beneficiaries under the taxpayer's will. Therefore, it cannot be said that, had the applicant died during the year of income, it would have been reasonable to expect that superannuation benefits would be provided for his dependants. That is so even though all or some of the death benefits would be paid to the applicant's dependants for it is accepted that their share of his estate would be augmented by the death benefits. There is, however, a difference between payment of an augmented amount of money to the applicant's dependants who are his beneficiaries and provision for them as his dependants.

48. It follows that it cannot be said that it would be reasonable to expect that the death benefits would be supplied to, or furnished for the use of (i.e. provided for) the applicant's dependants. We note that a similar conclusion was reached in Case T32 and refer particularly to paragraph 13 of the decision. The Tax Board of Review noted that it is at the applicant's option whether he makes provision for his dependants or not. On our analysis, that is not relevant in the case we have considered for we have accepted that the dependants are residuary beneficiaries.

49. It was not suggested to us and the parties agreed there is no basis to find that paragraph 82AAS(b) has any operation on the facts of this case. Nor was it suggested that this is a case involving a shortfall component.

For the reasons we have given we

1. set aside the decision under review;

2. substitute a decision that the applicant is an eligible person within the meaning of sub- section 82AAS(2) of the Income Tax Assessment Act 1936 during the year of income ended 30 June, 1993; and

3. adjourn further consideration.


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