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Edited version of private advice
Authorisation Number: 1051789228107
Date of advice: 22 January 2021
Subject: Death benefits and interdependency relationship
Is the Beneficiary a death benefits dependant of the Deceased in accordance with section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997)?
This ruling applies for the following period:
Year ending 30 June 2020
The scheme commences on:
1 July 2019
Relevant facts and circumstances
The Deceased was XX when they passed away on DD MM YYYY.
The Deceased lived with the Beneficiary in the same address all their life.
Before the Deceased's death they were in an accident on DDMMYY where they were seriously injured. The Deceased was unable to work and underwent a long and intensive rehabilitation. The Beneficiary was present when they were in hospital and required medical care.
The Beneficiary provided extensive emotional support during this time as well as helping out with the physical rehabilitation.
As a result of this accident the Deceased suffered from depression that was formally diagnosed by a doctor.
The Beneficiary drove the Deceased to attend medical appointments. They accompanied them to Emergency departments for depression treatments.
Before the accident, the Deceased completed all the general maintenance around the house.
The Beneficiary provided domestic support to the Deceased by way of doing all the cooking, shopping for groceries, washing clothes and cleaning.
The Deceased provided $70 per week in cash to the Beneficiary for telephone, electricity and household expenses and paid for their share of food. The Deceased helped financially if household products needed repair or replacement.
The Beneficiary paid for the electricity bills and council rates.
The Deceased provided help to the Beneficiary when the Beneficiary developed a serious medical condition and other health issues.
On DD MM YYYY an amount of taxed element $xxxx was paid to the Deceased.
On DD MM YYYY an amount $xxx,xxx of taxed element was paid to the Estate of the Deceased.
The Beneficiary is entitled to 50% of the death benefits.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 302-60
Income Tax Assessment Act 1997 Section 302-195
Income Tax Assessment Act 1997 Section 302-200
Income Tax Assessment Act 1997 Section 302-300
Income Tax Assessment Regulations 1997 Regulation 302-200.01
Supplementary Explanatory Memorandum Superannuation Legislation Amendment (Choice of
Superannuation Funds) Act 2004
Reasons for decision
Superannuation lump sum death benefit
Under section 302-60, a superannuation lump sum death benefit received by a person who is a
'death benefits dependant' of the deceased, is not assessable income and is not exempt income.
Meaning of death benefits dependant
Subsection 302-195(1) defines death benefits dependant of a person who has died as:
(a) the deceased person's *spouse or former spouse; or
(b) the deceased person's *child, aged less than 18; or
(c) any other person with whom the deceased person had an interdependency relationship under section 302-200 just before he or she died; or
(d) any other person who was a dependant of the deceased just before he or she died.
*To find the definition of asterisked terms, see the Dictionary, starting at section 995-1.
As the Beneficiary is a mother of the Deceased, paragraphs 302-195(1)(a) and (b) do not apply in this case. Therefore, to conclude that the Beneficiary is a death benefits dependant of the Deceased, it must be established that the Beneficiary had an 'interdependency relationship' with the Deceased, or that they were a 'dependant' of the Deceased just before the Deceased died.
Subsection 302-200(1) states that two persons (whether or not related by family) have an
(a) they have a close personal relationship; and
(b) they live together; and
(c) one or each of them provides the other with financial support; and
(d) one or each of them provides the other with domestic support and personal care.
Subsection 302-300(3) provides that matters to be taken into account in determining whether
two persons have an interdependency relationship under that section may be specified in the
regulations. Regulation 302-200.01 of the Income Tax Assessment Regulations 1997 (ITAR 1997) states that in considering paragraph 302-200(3)(a), the matters to be taken into account are all the relevant circumstances of the relationship between the persons, including:
the duration of the relationship; and
• the degree of mutual commitment to a shared life; and
• the reputation and public aspects of the relationship; and
• the degree of emotional support; and
• the care and support of children; and
• the extent to which the relationship is one of mere convenience; and
• any evidence suggesting that the parties intend the relationship to be permanent; and
• the existence of a statutory declaration signed by one of the persons to the effect that the person is, or (in the case of a statutory declaration made after the end of the
relationship) was, in an interdependency relationship.
Close personal relationship
A close personal relationship, as specified in subsection 302-200(1), would not normally exist between parents and their children because there would not be a mutual commitment to a shared life between the two. In addition, an adult child's relationship with their parents would be expected to change significantly over time as the child moves out of home and obtained independence.
However, where unusual and exceptional circumstances exist, a relationship between a parent and an adult child may be treated as an interdependency relationship for the purposes of subsection 302-200(1).
Applying the above to this case, it is considered that the relationship between the Beneficiary and the Deceased was over and above that of a normal family relationship and that a close personal relationship existed as required by paragraph 302-200(1)(a).
The matters that indicate that the Beneficiary and the Deceased had a close personal relationship prior to the Deceased's death are:
• the Beneficiary had lived with the Deceased all of their life. The Deceased was xx years of age when they passed away. The Deceased had never married and the Beneficiary was divorced.
• the Beneficiary and the Deceased emotionally supported each other, the Beneficiary provided significant emotional support to the Deceased following his serious accident and when the Deceased suffered depression;
• the facts indicate that the relationship between the Deceased and the Beneficiary was likely to be permanent given that the Deceased was still living with the Beneficiary at age xx;
• there is nothing to indicate that the relationship was one of mere convenience.
The Deceased and the Beneficiary were living together at the time of the Deceased's death and they had done so for the duration of the Deceased's life. Therefore, paragraph 302-200(1)(b) has been satisfied.
Financial support under paragraph 302-200 (1) (c) is satisfied if some level (not necessarily substantial) of financial support is being provided by one person (or each of them) to the other, for example providing support for a person's household and/or medical expenses.
In this case, the facts indicate that the Deceased provided financial support in the form of paying $70 per week towards telephone, electricity and household expenses. The payment was regular and continuous until the Deceased's death. The Deceased also helped financially if products needed repair or replacement. The Beneficiary paid for the electricity bills and council rates. Accordingly, paragraph 302-200(1)(c) has been satisfied.
Domestic support and personal care
The meaning of domestic support and personal care was discussed in the Supplementary
Explanatory Memorandum Superannuation Legislation Amendment (Choice of Superannuation
Funds) Act 2004 and paragraph 2.16 states:
Domestic support and personal care will commonly be of a frequent and ongoing nature. For
example, domestic support services will consist of attending to the household shopping, cleaning,
laundry and like services. Personal care services may commonly consist of assistance with mobility,
personal hygiene and generally ensuring the physical and emotional comfort of a person.
From the facts presented, the Beneficiary and the Deceased both provided domestic support and personal care to each other on an ongoing basis.
It is therefore considered that paragraph 302-200(1)(d) has been satisfied in this instance.
The Beneficiary meets all the requirements of an interdependency relationship for the purposes
of subsection 302-200(1). Therefore, the Beneficiary is a death benefits dependant of the Deceased for the purposes of section 302-195.
Consequently, it is not necessary to consider whether the Beneficiary is a 'dependant' of the
Deceased under paragraph 302-195(1)(d).