ATO Interpretative Decision

ATO ID 2005/313 (Withdrawn)

Income tax

• This ATO ID is withdrawn as the new subsection 272-95(2) of Schedule 2F to the Income Tax Assessment Act 1936 provides that after 1 July 2007, a person does not cease to be a family member merely because of the death of any other family member. Despite its withdrawal from the database, this ATO ID continues to be a precedential view in respect of the membership of the test individual's family before 1 July 2007.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the spouse of a family member of the test individual still a member of the test individual's family as defined by section 272-95 of Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) after the death of that family member?

Decision

Yes. The spouse of a family member of the test individual remains a member of the test individual's family as defined by section 272-95 of Schedule 2F to the ITAA 1936 after the death of that family member. They will cease to be a family member if they remarry or enter into a defacto relationship.

Facts

A family trust election is made pursuant to section 272-80 of Schedule 2F to the ITAA 1936 after the death of the test individual's brother. The brother had a spouse at the time of his death.

Reasons for Decision

Section 272-95 of Schedule 2F to the ITAA 1936 provides that:

The "family" of an individual (the "test individual") consists of all of the following (if applicable):

(a)

any parent, grandparent, brother, sister, nephew, niece, child, or child of a child, of:

(i)

the test individual; or

(ii)

the test individual's spouse;

(b)

the spouse of the test individual or of anyone who is a member of the test individual's family because of paragraph (a).

Child and spouse are defined in subsection 6(1).

Subsection 6(1) of the ITAA 1936 defines 'spouse' as including 'another person who, although not legally married to the person, lives with the person on a bona fide domestic basis as the husband or wife of the person'.

Where an individual was the spouse of a family member of the test individual as defined by section 272-95 of Schedule 2F to the ITAA 1936 at the time of the family member's death, the individual will be considered to remain the spouse of the family member within the meaning of section 272-95 until such time as the individual begins to have a new spouse.

Therefore, if the individual in question enters into a 'marital type' relationship (by either remarrying or entering into a de facto relationship) then at that point in time the individual will cease to be the 'spouse' of the deceased family member. Accordingly, the individual would no longer be regarded as a 'family' member for the purposes of section 272-95 of Schedule 2F to the ITAA 1936.

Year of income:  Year ended 30 June 2005

Legislative References:
Income Tax Assessment Act 1936
   subsection 6(1)
   section 272-80, Schedule 2F
   section 272-95, Schedule 2F

Related ATO Interpretative Decisions
ATO ID 2001/742

Keywords
Death of spouse
Family trust distribution tax
Family trust election
Family trusts
Spouse
Trust distributions
Trust losses

Business Line:  Losses and Capital Gains Tax Centre of Expertise

Date of publication:  18 November 2005

ISSN: 1445-2782