Edited version of private advice

Authorisation Number: 1052401167931

Date of advice: 5 July 2025

Ruling

Subject: Superannuation death benefits dependant - financial dependency

Question 1

Is the Beneficiary a death benefits dependant of the Deceased according to section 302-195 (1)(d) of the Income Tax Assessment Act 1997 (ITAA 1997), due to being a person who was a dependant of the Deceased just before they died?

Answer 1

No.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances:

The Beneficiary is the adult child of the Deceased.

The Deceased died on XX XX 20XX (Date of Death), and the death certificate was issued on XX XX 20XX.

On XX XX 20XX the Deceased's superannuation fund (the Fund) paid $XXX,XXX.XX to the Deceased's estate (the Estate).

There are two Beneficiaries and Trustees to the Estate who are the adult children of the Deceased.

You applied for a private ruling on XX XX 20XX about whether one of the Beneficiary's was a dependant of the Deceased.

The Beneficiary was born on XX XX 19XX and was therefore older than 18 years when the Deceased died.

The following statements were made in support of the application, concerning the nature of the relationship between the Beneficiary and the Deceased:

•                     In XX 20XX the Beneficiary's parent disappeared and was declared deceased by authorities in XX 20XX, who believed the death occurred at about the time of the Deceased's disappearance

•                     Leading up to and at the time of the Deceased's death, the Beneficiary was dependant on the Deceased who was providing financial support to them

•                     Financial support ceased at the time of the Deceased's disappearance

•                     In 20XX and up until 20XX, the Beneficiary lived in a property owned by the Deceased who was the sole contributor to the mortgage, household bills and general living expenses including groceries

•                     Living arrangements changed in 20XX when the Deceased moved out of the property to reside in a rental with their other child, while the Beneficiary remained in the property

•                     Immediately prior to the Deceased going overseas in 20XX, they would spend X to X nights a week staying in the property with the Beneficiary to provide support and assistance to ensure the Beneficiary was coping living on their own

•                     After finishing school in 20XX and having obtained low paying jobs, the Beneficiary received employment as a trainee XXX XXX in XX 20XX and the modest income was still insufficient to meet daily and basic needs without the financial support provided by the Deceased

•                     The times that the Beneficiary was unemployed, they made no financial contribution at all

•                     From 20XX to the Deceased's death in XX 20XX, the Deceased continued to fund majority of the costs associated with the property and contributed substantially to the Beneficiary's living expenses

•                     The Beneficiary made nominal financial contributions to assist with these costs and tried to pay $XXX-$XXX per week however these payments were irregular

•                     The Beneficiary depended on the Deceased's financial support to survive on a day-to-day basis, including funding their living arrangement and household expenses

•                     The Deceased would deposit money into the Beneficiary's bank account, provide their debit card for groceries and take away meals and contribute to the running costs in particular registration of the Beneficiary's vehicle vehicle which the Deceased purchased for the Beneficiary in 20XX

•                     The Beneficiary's financial dependency on the Deceased was quickly realised shortly after the Deceased's death as the mortgage on the property went into arrears as the Beneficiary was unable to meet the repayments

•                     The property was sold by the bank and the Beneficiary was left homeless for several months, was required to couch surf and seek assistance from their partner's parents

•                     It is difficult to itemise and quantify the support in detail as the Deceased paid for expenses directly such as groceries or provided cash for take away meals and shopping

To support the application, the Beneficiary provided the following documentation:

•                     Statutory declaration, signed and dated XX XX 20XX declaring

­        The Deceased purchased a property and they both moved in, in around XX 20XX

­        The Beneficiary was completely financially dependent upon the Deceased until they completed year XX in 20XX

­        In 20XX the Beneficiary began work as a XXX XXX and then as a XXX XXX XXX, they were not earning a lot of money when they first started work

­        The Deceased paid all the costs of the property including utility bills and groceries

­        The Deceased moved out of the property to a rental with their other child in 20XX while the Beneficiary continued to live at the Deceased's property

­        Once the Deceased had moved, the Beneficiary started to make contributions towards the costs they were incurring by trying to pay $XXX per week, they were not always able to make a contribution

­        The Beneficiary was unemployed when they were in between jobs and during these periods the Beneficiary advises that the Deceased gave them 'a free pass'

­        The Beneficiary commenced as a XXX XXX XXX in XX 20XX, and they resumed making more regular payments of $XXX-$XXX per week as a contribution to living at the Deceased's property

­        The Deceased did not put any pressure or expectation on the Beneficiary to contribute and paid the majority of the costs associated with the property

­        The Deceased opened a savings account for the Beneficiary and would put money into the account to help with the Beneficiary's bills

­        The Deceased would provide their debit card to the Beneficiary when they did shopping and would allow the Beneficiary to use their money for take away meals

­        In 20XX the Deceased bought them a car and paid the car registration for them with the Beneficiary paying the registration themselves for the first time in 20XX

­        In XX 20XX, the Deceased went overseas for a holiday, while the Beneficiary continued to live in the Deceased's property

­        The Deceased passed away in 20XX, the Beneficiary was XX years of age at this time

­        Due to the circumstances surrounding the Deceased's death, their death certificate was issued in XX 20XX

­        Immediately prior to the Deceased going overseas in 20XX, they regularly spent 2 or 3 nights per week staying at the property with the Beneficiary and spent the remainder of the week with the Beneficiary's sibling

­        The Deceased continued to financially contribute to the Beneficiary's living costs, this included allowing them to pay well below market rent while staying with them

­        If the Beneficiary missed payments or was unable to make any payments, the Deceased did not hold it as a debt nor chase them

­        The Beneficiary found themselves in a difficult financial position when it became unclear of the Deceased's return because they were no longer receiving any assistance from the Deceased

­        The Deceased's property went into arrears and despite the Beneficiary's best efforts they were not able to pay the money owing, and the property was subsequently sold

­        As it was not known what had happened to the Deceased or when they would return, the Beneficiary did not make a conscious effort to collate and retain documents relating to their financial dependence

•                     Bank statements for the Deceased were provided for the following periods

­        1 January 20XX to 31 March 20XX

­        1 April 20XX to 30 June 20XX

­        1 July 20XX to 30 September 20XX

­        1 October 20XX to 31 December 20XX

­        1 January 20XX to 31 March 20XX

­        1 April 20XX to 30 June 20XX

­        1 July 20XX to 30 September 20XX

•                     The bank statements for the Deceased include a table titled 'identifiable transfers from the XXXX (the Deceased) to XXXX (the Beneficiary) and the following amounts were listed:

­        28 January 20XX- $XXX (description: loan)

­        1 June 20XX- $XX (description: loan)

­        29 June 20XX- $XXX (description: loan)

­        30 November 20XX- $XXX (description: loan)

­        14 December 20XX- $XXX (description: loan)

­        28 December 20XX- $XXX (description: repay)

­        25 January 20XX- $XXX (description: repay)

­        8 February 20XX- $XXX (description: loan)

­        22 February 20XX- $XXX (description: loan)

­        14 June 20XX- $XXX (description: loan)

In a response to further information, the following documentation was provided on XX XX 20XX:

•                     Death Certificate of the Deceased showing date of death

•                     Letter from the Deceased's superannuation fund dated XX XX20XX advising approval has been granted to pay the lump sum of $XXX,XXX.XX to the Estate

•                     PAYG payment summary- superannuation lump sum for year ending 30 June 20XX, showing the amount to be paid per beneficiary

•                     Bank statements of the Beneficiary for the following periods, which include payroll details:

­        6 September 20XX to 4 November 20XX

­        4 November 20XX to 6 January 20XX

­        6 March 201XX to 5 May 20XX

­        5 May 20XX to 6 July 20XX

­        6 July 20XX to 6 September 20XX

•                     Bank statements for the Beneficiary have the following transactions highlighted:

­        6 October 20XX- $XXX to XXXXX

­        20 October 20XX- $XXX to XXXXX

­        3 November 20XX- $XXX to XXXXX

­        1 December 20XX- $XXX to XXXXX

­        29 December 20XX- $XXX transferred from the Deceased transaction is labelled 'repay'

­        29 December 20XX-$XXX to XXXXX

­        9 March 20XX- $XXX to XXXXX

­        23 March 20XX- $XXX to the Deceased

­        6 April 20XX- $XXX to the Deceased

­        4 May 20XX- $XXX to the Deceased

­        18 May 20XX- $XXX to the Deceased

­        1 June 20XX- $XXX to the Deceased

­        15 June 20XX- $XXX to the Deceased

­        29 June 20XX- $XXX to the Deceased

­        13 July 20XX- $XXX to the Deceased

­        27 July 20XX- $XXX to the Deceased

­        10 August 20XX- $XXX to the Deceased

­        24 August 20XX- $XXX to the Deceased

After reviewing the statements, we identified additional relevant transactions that were not initially highlighted by the client:

•                     25 November 20XX- $XXX to the Deceased

•                     20 April 20XX- $XXX to the Deceased

We were advised on XX XX 20XX that there were difficulties in obtaining bank statements dating prior to 1 September 20XX.

On XX XX, XX XX and XX XX 20XX, we requested bank statements for the Beneficiary that were missing for the period 6 January 20XX to 6 March 20XX however further details were not provided. The Deceased's bank statements show no transfers for these periods.

On XX XX, XX XX and XX XX 20XX, clarification was required for the $XXX payments that were highlighted however no explanation has been provided.

On XX XX 20XX, we requested additional information to support the application and subsequently sent follow-up requests. However, no further information was provided

On XX XX 20XX you confirmed with an ATO officer that the ATO could use internal data to confirm the Beneficiary's taxable income.

Relevant legislative provisions:

Income Tax Assessment Act 1997 section 302-195

Income Tax Assessment Act 1997 section 302-200

Income Tax Assessment Act 1997 section 995-1

Income Tax Assessment Act 1997 Regulations 2021 section 302-200.01

Income Tax Assessment Act 1997 Regulations 2021 section 302-200.02

Reasons for decision:

Summary:

The Beneficiary is not a death benefits dependant of the Deceased just before they died. Paragraph 302-195(1)(d) of the ITAA 1997 is not satisfied therefore, the Beneficiary is not a death benefits dependant of the Deceased.

Consequently, the taxable component of the superannuation lump sum death benefit paid to the Beneficiary is assessable income, taxed under section 302-145 of the ITAA 1997

Detailed reasoning

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.

As the Beneficiary is the adult child of the Deceased, paragraphs 302-195(1)(a) and (b) of the ITAA 1997 are not applicable.

As the Beneficiary did not permanently live with the Deceased in the period leading up to the Deceased's death, the requirements of paragraph 302-195(c) of the ITAA 1997 (interdependency relationship) cannot be satisfied.

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.

The Macquarie Dictionary defines 'dependant' as a person to whom one contributes all or a major amount of necessary financial support.

There are a number of case law decisions that specify what is required to establish financial dependency. Specifically, the definition of dependency was addressed and interpreted in the High Court case of Kauri Timber Co (Tasmania) Pty Ltd v. Reeman (1973) 47 ALIR 184 (Kauri Timber); Gibbs J in speaking to previous cases on the issue of dependency stated that:

The principle underlying these authorities is the actual fact of dependency or reliance on the earnings of another for support that is the test.

That dependency involves more than the mere receipt of support, but also reliance on it, was affirmed by Hamilton J in Griffiths v Westernhagen [2008] NSWSC 851:

For a relationship of dependency to be established there must be more than the mere giving of money. Rather there must be a relationship where one party relied on the other for what is required for their ordinary living.

This was also reflected in Edwards v Postsuper Pty Ltd [2007] FCAFC 83 where the Full Court of the Federal Court agreed with the Tribunal that while the deceased provided many gifts to his family, it did not consider that would make the appellants and their family financially dependent on the deceased.

Senior Member Pascoe in Re Malek v Federal Commissioner of Taxation [1999] AATA 678 (Malek) in providing his view on the meaning of dependence stated:

In my view, the relevant financial support is that required to maintain the persons normal standard of living and the question of fact to be answered is whether the alleged dependant was reliant on the regular continuous contribution of the other person to maintain that standard.

In the matter of Malek, the Tribunal made reference to the earlier authority of Simmons v White (1899) 1 QB 1005 and the statement from Romer LJ who stated that dependants:

must be dependants in the proper sense of the work, and not merely persons who derive a benefit from the earnings of the deceased.

Further, in Malek, the evidence provided demonstrated that the deceased was responsible for the mortgage repayments, maintenance and other expenses of the residence in which both the deceased and the dependant lived. The Tribunal considered that the amounts provided by the deceased were significant.

In this case, we have been advised 'it is difficult to itemise and quantify the support in detail as the Deceased paid for expenses directly such as groceries or provided cash for take away meals and shopping'. As such, there is little in the way of evidence which can be provided.

It has been stated that the Deceased purchased a car for the Beneficiary and paid the car registration up until 201XX, however no evidence has been provided.

Limited evidence has been provided pertaining to bank transfers. The bank statements and ATO-held data show that the beneficiary was in receipt of regular wage payments from their employer during the 20XX-20XX income year and these were still being received at the Date of Death.

Bank statements provided for the Beneficiary reflect payments for essential and living expenses including groceries, take away, petrol and their prepaid phone bill.

Based on the available bank statements of the Deceased, for the period X September 20XX to X September 20XX the Beneficiary received XX payments totalling an estimated $X,XXX in bank transfers from the Deceased. Additionally, the bank statements show that the Beneficiary transferred XX payments totalling an estimated $X,XXX for the period X XXX 20XX - X XXX 20XX. The bank statements provide minimal evidence of financial support to the Beneficiary, and neither the amount nor the frequency suggests financial dependence.

It is accepted that the Beneficiary was living at the property that the Deceased purchased and was not paying for the running's costs of the property however no evidence has been provided to show the amounts that the Deceased paid towards the property costs, additionally no evidence has been provided that shows financial support to assist the Beneficiary to meet their ordinary living expenses.

The Beneficiary's income history from 20XX-20XX reflects that at the beginning they received limited income and had periods of unemployment. However, by the 20XX-20XX income year and at the Date of Death, which occurred in the 20XX-20XX income year, the Beneficiary was receiving regular wages, and they were not financially dependent on the Deceased to pay for their ordinary living expenses.

Based on the evidence provided, the Commissioner is not satisfied that the Beneficiary was a person who was substantially reliant on regular and continuous financial support from the Deceased for their ordinary living expenses.

As a result, paragraph 302-195(1)(d) of the ITAA is not satisfied, and the Beneficiary is not a death benefits dependant of the Deceased.

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