ATO Interpretative Decision

ATO ID 2002/481 (Withdrawn)

Superannuation

Superannuation, retirement & employment termination: Eligible termination payment (ETP): ETP death benefit dependant
FOI status: may be released

This ATO ID is withdrawn because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 2006-2007 income year. Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of decisions for income years up to, and including, the 2006-2007 income years.
See ATO ID 2014/6, which reflects the same view in respect of the replacement or rewritten provision, for decisions for income years after the 2007-2008 income year.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is a taxpayer in receipt of the Youth Allowance at the time of the death of a parent, a dependant of the parent for the purpose of section 27AAA of the Income Tax Assessment Act 1936 (ITAA 1936)?

Decision

The taxpayer is a dependant of the parent for the purpose of section 27AAA of the ITAA 1936.

Facts

The taxpayer receives a death benefit eligible termination payment (ETP) from the parent's superannuation fund after the parent's death. The taxpayer is over 18 years old at the time, was living at home with the parent until the parent's death and receiving the Youth Allowance payments from Centrelink.

Reasons for Decision

Concessional tax treatment is available under section 27AAA of the ITAA 1936 when death benefit ETPs are paid to dependants. The term 'dependant' is defined in subsection 27A(1) of the ITAA 1936. Paragraph 27A(1)(b) of the ITAA 1936 states that a dependant of a person includes a child of the person under the age of 18 years. Since this is an inclusive definition, the term is interpreted according to its normal meaning with the proviso that a child of the person under the age of 18 years is by definition a dependant of the person.

Dictionary definitions of 'dependant' make reference to substantial financial support. That dependency involves substantial financial support or maintenance is supported by passages in the Explanatory Memorandum to the Income Tax Assessment Amendment Bill (No.3) 1984.

The determination of financial dependency is a question of fact. The Youth Allowance payments the taxpayer received were calculated at a lower 'at home' rate as opposed to the higher 'independent' rate. This indicates that the taxpayer was substantially financially dependent. A comparison of the level of financial support provided by the taxpayer's parent with that provided by the Youth Allowance payments also indicates that the taxpayer was financially dependent.

Note: the above analysis will only apply for payments made before 1 July 2007 as subection 27A(1) and section 27AAA of the Income Tax Assessment Act 1936 have been repealed by the Superannuation Legislation Amendment (Simplification) Act 2007. The views in the ATO ID on who is a 'dependant' are relevant to decisions involving section 302-195 of the Income Tax Assessment Act 1997 in the 2007-2008 income year and later income years.

Date of decision: 9 October 1998

Legislative References:
Income Tax Assessment Act 1936
section 27AAA
subsection 27A(1)

Keywords
ETP death benefit
ETP death benefit dependants
Eligible termination payments

Business Line: Superannuation

Date of publication: 30 April 2002

ISSN: 1445-2782

history

	Date:	Version:
	9 October 1998	Original statement
You are here	21 February 2014	Archived

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