Edited version of your written advice

Authorisation Number: 1013003106748

Date of advice: 26 April 2016

Ruling

Subject: Interdependency relationships

Question

Did a person (the Taxpayer) have an interdependency relationship with a deceased person (the Deceased) as defined in section 302-200 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes

This ruling applies for the following period:

Income year ending 30 June 2016

The scheme commences on:

1 July 2015

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

The Deceased died as a result of a serious life-long illness.

The Deceased was not married, not in a de factor relationship and had no children.

The Taxpayer is the parent of the Deceased.

The Deceased had lived with the Taxpayer until late 20XX when they decided to share a house with friends in order to become more independent.

The house the Deceased shared with their friends was in close proximity to the Taxpayer's home so that they could easily get assistance from the Taxpayer if and when required.

During the time the Deceased lived with the Taxpayer, and during the HITH care after the Deceased moved out of the family home, the Taxpayer assisted the Deceased by:

• preparing their meals;

• washing and ironing their clothes;

• preparing and administering antibiotics;

• maintaining medical and physical therapy equipment;

• providing transport to and from the hospital; and

• paying for the medical costs and other incidentals.

The Deceased did not contribute towards household expenses while living at the Taxpayer's home.

During the periods the Deceased lived away from the family home, their medical and physical therapy equipment remained set up in the Taxpayer's home. During these times, the Taxpayer also provided care and emotional support to the Deceased at times they were suffering depression or feeling unwell.

Several months before their death, the Deceased was no longer able to live in the shared residence due to degenerative effects of their illness and decided to move back into the family home so that the Taxpayer could provide them with the care and support they needed.

The Deceased began the process of moving back into the family home following the conclusion of their last HITH admission. At this time, the Deceased was living at both residences until leaving for an overseas holiday. They intended to complete their return to the family home following the conclusion of their holiday.

However, during the holiday, the Deceased's health severely deteriorated and they were hospitalised in an overseas country where they died a few days later with the Taxpayer at their side.

The cost of the hospital stay, the transfer to, and the stay in another overseas hospital and the repatriation of the Deceased's body to Australia were paid for by the Taxpayer.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 302-195.

Income Tax Assessment Act 1997 section 302-200.

Income Tax Assessment Regulations 1997 subregulation 302-200.01

Income Tax Assessment Regulations 1997 subregulation 302-200.02

Reasons for decision

Summary

The Taxpayer and the Deceased had an interdependency relationship for the purposes of section 302-200 of the ITAA 1997 just before the Deceased died.

Therefore, the Taxpayer is a death benefits dependant of the Deceased for the purposes of section 302-195 of the ITAA 1997.

Detailed reasoning

Death benefits dependant

Section 302-195 of the ITAA 1997 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 person just before he or she died.

*To find definitions of asterisked terms, see the Dictionary, starting at 995-1

As the Taxpayer is a parent of the Deceased, paragraphs 302-195(1)(a) and (b) of the ITAA 1997 do not apply in this case. Therefore, to conclude that the Taxpayer is a death benefits dependant of the Deceased, it must be established that the Taxpayer had an interdependency relationship with the Deceased, or that they were a dependant of the Deceased just before the Deceased died.

Interdependency relationship

Subsection 302-200(1) of the ITAA 1997 provides that two persons (whether or not related by family) have an interdependency relationship under that section if:

(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.

In accordance with subsection 302-200(2) of the ITAA 1997, two persons may also have an interdependency relationship if they have a close personal relationship but cannot satisfy any of the other requirements of subsection 302-200(1) of the ITAA 1997 because either or both of them suffer from a physical, intellectual or psychiatric disability.

Subsection 302-200(3) of the ITAA 1997 provides that matters and circumstances that are, or are not, to be taken into account in determining whether two persons have an interdependency relationship under that section may be specified in the regulations.

To that effect, regulation 302-200.01 of the Income Tax Assessment Regulations 1997 (ITAR 1997) provides that the matters to be taken into account for the purposes of paragraph 302-200(3)(a) of the ITAA 1997 (where relevant) are all the circumstances of the relationship between the persons, including (in this case):

(i) the duration of the relationship; and …

(iv) the degree of mutual commitment to a shared life; and …

(vi) the reputation and public aspects of the relationship; and

(vii) the degree of emotional support; and

(viii) the extent to which the relationship is one of mere convenience; and …

In accordance with regulation 302-200.02 of the ITAR 1997 two persons have an interdependency relationship if:

(a) they have a close personal relationship; and

(b) they do not satisfy the other requirements set out in subsection 302-200(1) of the Act; and

(c) the reason they do not satisfy the other requirements is that they are temporarily living apart.

Close personal relationship

Generally, a close personal relationship as specified in subsection 302-200(1) of the ITAA 1997 would not exist between a parent and child. This is because the relationship between a parent and child would be expected to change significantly over time and there would be no mutual commitment to a shared life between the two. However, where, as in this case, unusual and exceptional circumstances exist, a relationship between a parent and child may be treated as an interdependency relationship for the purposes of subsection 302-200(1) of the ITAA 1997.

It is considered that the relationship between the Taxpayer 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) of the ITAA 1997.

The matters that indicate that the Taxpayer and the Deceased had a close personal relationship prior to the Deceased's death are:

• A close familial relationship existed between the Taxpayer and the Deceased prior to and at the time of the Deceased's death that was over and above that of a normal relationship between a parent and an adult child. This was demonstrated in a number of ways such as the personal care and physical assistance that the Taxpayer provided to the Deceased during their illness.

• During the time the Deceased stayed with the Taxpayer, the Taxpayer provided the Deceased with emotional support, HITH care, and personal care and domestic support.

• The Taxpayer transported and accompanied the Deceased to medical and hospital appointments.

• When the Deceased became hospitalised while on an overseas holiday, the Taxpayer travelled overseas to provide the Deceased with emotional support and arranged and paid for the transfer from one overseas hospital to the other.

Living together

The Deceased lived with the Taxpayer for most of their life. They moved out of the family home they shared with the Taxpayer in order to share life experiences with their friends and become more independent from their parents.

When the Deceased's illness progressed and they became unable to live without the care and support provided by the Taxpayer, they stayed with the Taxpayer for part of the week while making arrangements to move back permanently into the family home.

Facts indicate that but for the trip overseas and subsequent illness that prevented them from travelling back to Australia, the Deceased would have been living with the Taxpayer at the time of their death.

Hence, it is considered that the Deceased and the Taxpayer were living together.

Financial support

Financial support under paragraph 302-200(1)(c) of the ITAA 1997 is satisfied if some level (not necessarily substantial) of financial support is being provided by one person (or each of them) to the other.

The Taxpayer provided the Deceased with additional financial support necessary to meet their day-to-day living expenses including medical costs, food, accommodation, cleaning and transportation.

Therefore, it is considered that the Taxpayer provided financial support to the Deceased.

Domestic support and personal care

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 activities. Personal care services may commonly consist of assistance with mobility, personal hygiene and generally ensuring the physical and emotional comfort of a person.

The Taxpayer provided the Deceased with domestic support services including household duties, cleaning, laundry and preparation of meals. They also accompanied the Deceased to medical and hospital appointments and provided them with physical and emotional support.

In view of the above it is considered that the requirement in paragraph 302-200(1)(d) of the ITAA 1997 has been met.

Therefore, the Taxpayer and the Deceased had an interdependency relationship as defined in section 302-200 of the ITAA 1997.

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