Edited version of your private ruling

Authorisation Number: 1052392405126

Date of advice: 26 May 2025

Ruling

Subject:Superannuation death benefit - interdependency

Question 1:

Was Beneficiary 1 a death benefits dependant of the Deceased according to section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997), due to being in an interdependency relationship with the Deceased under section 302-200 of the ITAA 1997?

Question 2:

Was Beneficiary 2 a death benefits dependant of the Deceased according to section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997), due to being in an interdependency relationship with the Deceased under section 302-200 of the ITAA 1997?

Answer 1:

No

Answer 2:

No

This ruling applies for the following period

30 June 2025

The scheme commences on:

1 July 2024

Relevant facts and circumstances:

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

1.    Beneficiary and Beneficiary 2 (collectively known as 'the Beneficiaries'), are the siblings of the Deceased.

2.    The Deceased died XX XX 20XX.

3.    The Deceased's estate (the Estate) received a death benefit payment from the Deceased's superannuation funds on XX XX 20XX and XX XX 20XX. No tax was withheld from either payment.

4.    You applied for a private ruling on XX XX 20XX.

5.    In support of the application, a statement was received detailing employment status and arrangements between the Deceased and the Beneficiaries regarding housekeeping, financial and physical support.

6.    In support of the application, a further statement was received, relating to the appointment of a legal personal representative, how the Deceased and the Beneficiaries supported each other in domestic duties, financial responsibilities, and mortgage payments.

7.    In support of the application, you provided the following documentation:

•         PAYG Payment Summary- Superannuation Lump Sum for the year ending XX XX 20XX

•         A letter from the superannuation fund dated XX XX 20XX, addressed to the Estate's Trustee, confirming the death benefit had been transferred to the nominated account, to be distributed by the legal representative of the Estate

•         PAYG Payment Summary- Superannuation Lump Sum for the year ending XX XX 20XX

•         A letter from the superannuation fund dated XX XX 20XX, addressed to the Estate, confirming the death benefit has been paid to the nominated account.

8.    On XX XX 20XX we were advised that:

•         The Beneficiaries and the Deceased lived week to week

•         The Beneficiaries do not have any bank statements as the living arrangements were in cash and not transfers to bank accounts

9.    In support of the application, you provided the following documentation:

•         Letters of Administration dated XX XX 20XX, granted to the Trustee to the Estate

•         Evidence that the Deceased resided at Beneficiary 1's Residence:

                              i.         Car insurance correspondence dated XX XX 20XX addressed to the Deceased, this was dated after their death

                             ii.        The Deceased's drivers' licence

                            iii.        Death certificate for the Deceased

•         Statutory declaration from Beneficiary 1 signed and dated XX XX 20XX which states:

                                 i.        The Deceased lived with them for about X years before the Deceased's death

                               ii.        They had previously lived together in rented accommodation

                              iii.        Before the Deceased died, they had a good relationship

                              iv.        They had conversations every day and had meals and drinks together a few times a week

                               v.        They were mates and siblings and were there for each other

                              vi.        They enjoyed coming home and having a talk with the Deceased at the end of the day

                             vii.        The Deceased paid cash to them for weekly expenses to help with mortgage payments like rent

                            viii.        The Beneficiaries and the Deceased took turns grocery shopping and shared housework and yard work together

                              ix.        Beneficiary 1 stated that the Beneficiaries and the Deceased lived like family, and they believed they were dependant on each other

•         Statutory declaration from Beneficiary 2 signed and dated XX XX 20XX which states:

                                    i.        They lived with their siblings (the Deceased and Beneficiary 1) for about the last X years before the Deceased died

                                   ii.        Before the Deceased died, they were good mates.

                                  iii.        They had conversations every day and had meals and drinks together a few times a week

                                 iv.        The Deceased helped them to deal with life and they also helped the Deceased

                                  v.        They spoke about things good and bad

                                 vi.        The Deceased paid cash to help them with day-to-day expenses and for bills such as electricity, phone and other things

                                vii.        The Beneficiaries and the Deceased took turns grocery shopping weekly and shared housework and gardening

                               viii.        Beneficiary 2 stated that the Beneficiaries and the Deceased lived like family, and they believed they were dependant on each other

10.  Further documentary evidence to support the private ruling application was requested on XX XX 20XX and follow up requests were sent on XX XX 20XX, XX XX 20XX and XX XX 20XX however no further evidence was provided.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 302-60

Income Tax Assessment Act 1997 Section 302-145

Income Tax Assessment Act 1997 Section 302-195

Income Tax Assessment Act 1997 Section 302-200

Income Tax Assessment (1997 Act) Regulations 2021 Section 302-200.01

Income Tax Assessment (1997 Act) Regulations 2021 Section 302-200.02

Reasons for decision:

Detailed reasoning

Meaning of death benefits dependant

1.    Division 302 of the ITAA 1997 sets out the taxation arrangements that apply to the payment of superannuation death benefits. These arrangements depend on whether the person that receives the superannuation death benefit is a dependant of the deceased and whether the amount is paid as a lump sum superannuation death benefit or a superannuation income stream death benefit.

2.    A superannuation death benefit is defined in section 307-5 of the ITAA 1997 as:

a.    A payment to you from a superannuation fund, after another person's death, because the other person was a fund member.

3.    A superannuation lump sum is described in section 307-65 of the ITAA 1997 as a superannuation benefit that is not a superannuation income stream, as defined in section 307-70 of the ITAA 1997.

4.    The taxable component of a superannuation death benefit paid as a lump sum to a non-dependant beneficiary is assessable income and is taxed under section 302-145 of the ITAA 1997.

5.    Where a person who was a dependant of the deceased receives a superannuation death benefit paid as a lump sum, the death benefit is not assessable income and is not exempt income, under section 302-60 of the ITAA 1997.

6.    Subsection 995-1(1) of the ITAA 1997 states that the term 'death benefits dependant' has the meaning given by section 302-195 of the ITAA 1997. Subsection 302-195(1) of the ITAA 1997 defines a 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.

7.    As the Beneficiaries are the siblings of the Deceased, paragraphs 302-195(1)(a) and (b) of the ITAA 1997 are not applicable.

8.    The definition of death benefits dependant does not stipulate the nature or degree of dependency required to be a dependant of the deceased person in paragraph 302-195(1)(d) of the ITAA 1997. However, it is generally accepted that this paragraph refers to financial dependence.

9.    The Beneficiaries were not financially dependent on the Deceased person and therefore, paragraph 302-195(1)(d) of the ITAA 1997 is not applicable.

10.  To meet the definition of a death benefits dependant, the Beneficiaries must have been in an interdependency relationship with the Deceased, in accordance with paragraph 302-195(1)(c) of the ITAA 1997.

Interdependency relationship

11.  Under subsection 302-200(1) of the ITAA 1997, an interdependency relationship is defined as:

Two persons (whether or not related by family) have an interdependency relationship under this 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.

12.  Subsection 302-200(2) of the ITAA 1997 states:

In addition, 2 persons (whether or not related by family) also have an interdependency relationship under this section if:

a.    they have a close personal relationship; and

b.    they do not satisfy one or more of the requirements of an interdependency relationship mentioned in paragraphs (1)(b), (c) and (d); and

c.     the reason they do not satisfy those requirements is that either or both of them suffer from a physical, intellectual or psychiatric disability.

13.  To assist in determining whether two people have an interdependency relationship, paragraph 302-200(3)(a) of the ITAA 1997 provides that the regulations may specify the matters that are or are not to be taken into account.

14.  Subsection 302-200.01(2) of the Income Tax Assessment (1997 Act) Regulations 2021 (ITAR 2021) states the matters to be taken into account. These matters are all of the circumstances of the relationship between the persons, including (where relevant):

a.    the duration of the relationship

b.    the ownership, use and acquisition of property

c.     the degree of mutual commitment to a shared life

d.    the care and support of children

e.    the reputation and public aspects of the relationship

f.      the degree of emotional support

g.    the extent to which the relationship is one of mere convenience

h.    any evidence that the parties intend the relationship to be permanent; and

i.      the existence of a statutory declaration signed by one of the persons to the effect that the person is, or (in the case of a statutory declaration made after the end of the relationship) was in an interdependency relationship with the other person.

15.  Paragraph 302-200(3)(b) of the ITAA 1997 states that the regulations may specify the circumstances in which two people have, or do not have an interdependency relationship.

16.  Section 302-200.02 of the ITAR 2021 sets out the circumstances in which two people have an interdependency relationship.

17.  Subsection 302-200.02(2) of the ITAR 2021 provides that an interdependency relationship exists between two people where:

a.    they satisfy the requirements of paragraphs 302-200(1)(a) to (c) of the ITAA 1997; and

b.    one or both of them provides the other with support and care of a type and quality normally provided in a close personal relationship rather than by a mere friend or flatmate, for example one person provides significant care for the other person when they are unwell or suffering emotionally.

18.  Subsections 302-200.02(3) and (4) of the ITAR 2021 provide that an interdependency relationship also exists between two people where:

a.    they have a close personal relationship; and

b.    they do not satisfy one or more of the other requirements set out in subsection 302-200(1) of the ITAA 1997 because:

                                  i.    they are temporarily living apart, for example because one of them is temporarily working overseas or in gaol; or

                                 ii.    one (or both) of them suffers from a disability.

19.  Subsection 302-200.02(5) of the ITAR 2021 states that two persons do not have an interdependency relationship if one of them provides domestic support and personal care to the other:

a.    under an employment contract or a contract for services; or

b.    on behalf of another person or organisation such as a government agency, a body corporate or a benevolent or charitable organisation.

20.  All of the conditions in subsection 302-200(1) of the ITAA 1997, or alternatively, subsection 302-200(2) of the ITAA 1997, or one of the tests in section 302-200.02 of the ITAR 2021 must be satisfied for a person to be in an interdependency relationship with another person. We deal with each condition in turn, to establish if an interdependency relationship existed.

Close personal relationship

21.  The first requirement to be met is specified in paragraph 302-200(1)(a) of the ITAA 1997, which states that the two persons (whether or not related by family) must have a close personal relationship.

22.  This requirement is common to all of the tests specified in section 302-200 of the ITAA 1997 and section 302-200.02 of the ITAR 2021.

23.  A detailed explanation of subsection 302-200(1) of the ITAA 1997 is set out in the Supplementary Explanatory Memorandum (SEM) to the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2004, which states:

a.    A close personal relationship will be one that involves a demonstrated and ongoing commitment to the emotional support and well-being of the two parties.

b.    Indicators of a close personal relationship may include:

i)      the duration of the relationship;

ii)     the degree of mutual commitment to a shared life;

iii)   the reputation and public aspects of the relationship (such as whether the relationship is publicly acknowledged).

24.  The above indicators are not an exclusive list and none of them are required for a close personal relationship to exist.

25.  People who share accommodation for convenience (such as flatmates) or people who provide care as part of an employment relationship or on behalf of a charity are not intended to fall within the definition of a close personal relationship

26.  The matters that indicate the Beneficiaries and the Deceased did not have a close personal relationship before the Deceased's death are:

•         The Beneficiaries and the Deceased did not provide significant care and support to each other

•         They did not provide each other with intensive and ongoing emotional, domestic and financial support

•         Details of their relationship have been provided in statutory declarations however this level of care did not exceed the care and comfort that would usually be provided by siblings. Further details of their care arrangements are provided below, under Financial Support and Domestic Support and Care

•         Although the Beneficiaries advised they lived together with the Deceased, the limited evidence provided does not demonstrate that they always intended to do so and had a mutual commitment to a shared life

27.  Therefore, a close personal relationship did not exist between the Beneficiaries and the Deceased, and the first requirement specified in paragraph 302-200(1)(a) of the ITAA 1997 has not been satisfied in this case.

Living together

28.  The second requirement to be met is specified in paragraph 302-200(1)(b) of the ITAA 1997 and states that two interdependent persons (whether or not related by family) live together.

29.  The term 'live' is not defined in the ITAA 1997 or accompanying regulations. According to the Macquarie Dictionary, the term 'live' means to dwell or reside. The term 'reside' is defined as the action of dwelling in a particular place permanently or for a considerable time. In the context of paragraph 302-200(1)(b) of the ITAA 1997, the living arrangements must have some degree of permanency that is only disturbed by the death of one of the persons.

30.  Prior to the Deceased's death, the Beneficiaries stated in statutory declarations that they had lived with the Deceased for the previous X-X years.

31.  ATO records show that Beneficiary 1 and 2 lived together since XXXX.

32.  ATO records show that the Deceased did not reside at the same address as the Beneficiaries.

33.  The following documentation was provided to show that the Deceased shared the same address as the Beneficiaries:

•         Drivers licence with expiry date XX XX 20XX

•         Death Certificate

•         Car insurance documentation dated XX XX 20XX; this is dated after the Deceased had died

34.  Although the Beneficiaries advised that they lived with the Deceased for the prior X-X years, the available evidence does not sufficiently support this assertion.

35.  Consequently, the requirement specified in paragraph 302-200(1)(b) of the ITAA 1997 has not been satisfied in this case.

Financial support

36.  The third requirement to be met is specified in paragraph 302-200(1)(c) of the ITAA 1997, which states that one or each of these two persons provides the other with financial support.

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

38.  We have been advised that:

Beneficiary 1 owned the house in which the Deceased lived for XX years. Arrangements were in place between the Deceased, Beneficiary 1 and Beneficiary 2, to pay bills and meet mortgage payments. Beneficiary 1 borrowed money from family to manage their bills and mortgage payments. Arrangements were verbal. The death of the Deceased impacted on employment and accommodation for the Beneficiaries.

39.  In a statutory declaration, Beneficiary 1 advised that the Deceased paid them cash for weekly expenses and to help with mortgage payments.

40.  In a statutory declaration, Beneficiary 2 advised that the Deceased paid cash to them to help with day-to-day expenses and bills for example electricity, phone and other things.

41.  We have been advised that the Beneficiaries and the Deceased lived week to week, that their financial arrangements were in cash, no supporting documentation has been provided.

42.  Therefore, due to insufficient evidence, we cannot substantiate financial support during prior to the Deceased's death.

43.  Consequently, paragraph 302-200(1)(c) of the ITAA 1997 has not been satisfied.

Domestic support and personal care

44.  The fourth requirement to be met is specified in paragraph 302-200(1)(d) of the ITAA 1997, which states that one or each of these two persons provides the other with domestic support and personal care. In discussing the meaning of domestic support and personal care, paragraph 2.16 of the SEM states:

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

45.  From the facts presented, the Beneficiaries and the Deceased did not provide significant assistance with domestic support and personal care.

46.  Evidence of domestic support and personal care provided was documented in the form of statutory declarations from the Beneficiaries, however no evidence has been provided to support the statements.

47.  Therefore, the requirement in paragraph 302-200(1)(d) of the ITAA 1997 has not been satisfied.

Conclusion

48.  As all of the requirements in section 302-200 of the ITAA 1997 have not been satisfied, the Deceased and Beneficiaries were not in an interdependency relationship in the period just before the Deceased's death.

49.  As the Beneficiaries were not in an interdependency relationship with the Deceased, the Beneficiaries are not death benefits dependant as defined under section 302-195 of the ITAA 1997.

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