ATO Interpretative Decision

ATO ID 2014/22

Income Tax

Death benefits dependant - adult child caring for terminally ill parent

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Can a taxpayer who is a child beneficiary over 18 years of age be a 'death benefits dependant' of the deceased for the purposes of section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes, in this case the taxpayer was considered to be a death benefits dependant for the purposes of section 302-195 of the ITAA 1997.

Facts

In this case the taxpayer (a child of the deceased) was paid a death benefit on the death of the parent. The taxpayer was over 18 years of age at the time of death. The taxpayer had given up work to care for the terminally ill parent and received no financial support from anyone, other than the parent, during that time.

Reasons for Decision

Under subsection 302-195(1) of the ITAA 1997, a 'death benefits dependant' as defined includes:

(a)
the spouse or former spouse of a person,
(b)
any child of the person under the age of 18 years,
(c)
any other person with whom the deceased person had an interdependency relationship under section 302-200 of the ITAA 1997 just before he or she died, and
(d)
any other person who was dependant of the deceased person just before he or she died.

The definition of death benefits dependant in paragraph 302-195(1)(d) does not stipulate the nature or degree of dependency, but it is generally accepted that this refers to financial dependence and it is a condition that must exist in relation to the taxpayer at the time of the deceased's death.

The taxpayer was financially dependent on the deceased at the time of death.

Note: The taxpayer and parent also satisfied the interdependency relationship requirement under paragraph 302-195(1)(c) and as described in paragraphs 302-200(1)(a),(b),(c) and (d) of the ITAA 1997: that is, the taxpayer and parent had a close relationship; they lived together; the parent provided financial support for the taxpayer; and the taxpayer was providing significant care for the parent.

Date of decision:  18 July 2014

Year of income:  2007 - 2008 income year and later years

Legislative References:
Income Tax Assessment Act 1997
   section 320-195
   section 302-200
   paragraph 302-195(1)(d)

Keywords
death benefits dependant
death benefits - superannuation benefits
superannuation
superannuation benefits

Business Line:  Superannuation

Date of publication:  18 July 2014
Date reviewed:  16 September 2016

ISSN: 1445-2782