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Edited version of private ruling
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Ruling
Subject: Superannuation death benefits - death benefits dependant
As the former spouse of a member of a superannuation fund, will the former spouse be considered a death benefits dependant as defined in section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Yes.
This ruling applies for the following period:
Year ending 30 June 2011
The scheme commences on:
1 July 2010
Relevant facts and circumstances
The superannuation fund currently has two members (Member 1 and Member 2) who are former spouses of each other.
Member 1 has elected Member 2 to be the sole beneficiary of all the assets of the Fund upon the death of member 1.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 302-60.
Income Tax Assessment Act 1997 Section 302-195.
Income Tax Assessment Act 1997 Subsection 302-195(1).
Income Tax Assessment Act 1997 Paragraph 302-195(1)(a).
Reasons for decision
Summary
Member 2, as the former spouse of Member 1, will be considered a death benefits dependant. A superannuation lump sum that is received as a death benefits dependant is not assessable income and is not exempt income of the recipient.
Detailed reasoning
Subsection 302-195(1) of the ITAA 1997 defines 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
(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 person just before he or she died.
In this particular case, on the facts provided, Member 2 as the sole beneficiary of the assets of the Fund upon the death of Member 1, will be considered a death benefits dependant in accordance with paragraph 302-195(1)(a) of the ITAA 1997 as Member 2 is the former spouse of Member 1.
A superannuation lump sum that a death benefits dependant receives is not assessable income and is not exempt income in accordance with section 302-60 of the ITAA 1997. That is, all of the superannuation lump sum will be tax free.
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