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Edited version of private advice
Authorisation Number: 1051988356895
Date of advice: 31 May 2022
Subject: Death benefit dependant
Is the Beneficiary and the spouse of the Deceased, a death benefit dependant in accordance with section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Is the superannuation lump sum death benefit paid to the Beneficiary from the estate of the Deceased excluded from assessable income under section 302-60 of the ITAA 1997?
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
This private ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are different from these facts, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
• The Beneficiary is the spouse of the Deceased.
• The Deceased died in the 20XX-XX income year.
• The Deceased's superannuation fund paid a superannuation lump sum to the Deceased's estate in the 20XX-XX income year.
• The applicant stated that the whole superannuation lump sum will be paid to the Beneficiary from the Deceased's estate
Reasons for decision
1. The Beneficiary that is the spouse of the Deceased is a death benefits dependant of the Deceased under paragraph 302-195(a) of the ITAA 1997.
2. Section 302-60 of the ITAA 1997 states that a superannuation lump sum death benefit paid to the Beneficiary that is dependant of the Deceased is not assessable income or exempt income, Accordingly, all of superannuation lump sum is tax free.
Superannuation death benefits paid to the trustee of a deceased estate
3. A payment made by a superannuation fund to a deceased estate after the death of the deceased is assessed as a death benefit under section 302-10 of the ITAA 1997.
4. The taxation arrangements that apply to this superannuation death benefit are determined in accordance with the taxation arrangements that would otherwise apply to the person or persons otherwise intended to benefit from the estate.
5. Subsection 302-10(2) of the ITAA 1997 applies to the estate where one or more beneficiaries of the estate who were death benefit dependants of the deceased have benefited, or may be expected to benefit, from the superannuation death benefit:
(a) the benefit is treated as if it had been paid to you as a person who was a death benefits dependant of the deceased; and
(b) the benefit is taken to be income to which no beneficiary is presently entitled.
Death benefits dependant
6. Subsection 302-195(1) of the ITAA 1997 defines a death benefits dependant as follows:
A death benefits dependant, of a person who has died, is:
(a) the deceased person's spouse or former spouse; or ...
7. Section 995 -1 of the ITAA 1997 defines a spouse as follows:
spouse of an individual includes:
(a) another individual (whether of the same sex or a different sex) with whom the individual is in a relationship that is registered under a *State law or *Territory law prescribed for the purposes of section 2E of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; and
(b) another individual who, although not legally married to the individual, lives with the individual on a genuine domestic basis in a relationship as a couple.
8. As the Beneficiary was the spouse of the Deceased, he is a death benefits dependant under paragraph 302-195(1)(a) of the ITAA 1997.
Taxation of lump sum death benefits to dependants
9. According to section 302-60 of the ITAA 1997:
A superannuation lump sum that you receive because of the death of a person of whom you are a death benefits dependant is not assessable income and is not exempt income.
10. In other words, all of superannuation lump sum paid to a death benefit dependant is tax free.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 302-10
Income Tax Assessment Act 1997 Section 302-60
Income Tax Assessment Act 1997 Section 302-195
Income Tax Assessment Act 1997 Subsection 995-1(1)