Edited version of your private ruling

Authorisation Number:1052451454103

Date of advice: 21 Nov 2025

Ruling

Subject: Superannuation death benefit - financial dependency

Question 1:

Is the Beneficiary a death benefits dependant of the Deceased in accordance with section 302-195 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:

Income year ending 30 June 20XX

The scheme commenced on:

The scheme commenced on 1 July 20XX

Relevant facts and circumstances

1.              The Beneficiary is the adult child of the Deceased.

2.              The Deceased died on XX XX 20XX (Date of Death).

3.              The Beneficiary was born on XX XX 20XX and therefore was older than 18 years at the Deceased's Date of Death.

4.              The Beneficiary received a death benefit payment from the Deceased's superannuation fund (the Fund), in the amount of $XXX,XXX (all taxed element) on XX April 20XX. The Fund withheld tax in the amount of $XX,XXX from the death benefit payment.

5.              A private ruling was applied for, contending that the Beneficiary was financially dependent on the Deceased.

6.              The following documentation was provided in support of the application:

a.              Bank statements for the Deceased XX July 20XX to XX July 20XX.

b.              Credit card statements for the Deceased XX June 20XX to XX July 20XX..

c.              Australian Tax Office (ATO) prefill summary for the 20XX-XX income year, confirming that the Beneficiary received the following assessable income:

                                 i.                  Wages and salaries $X,XXX

                                ii.                  Youth Allowance $X,XXX

d.              Centrelink 'Separation details' form dated XX April 20XX, confirming the separation of the Deceased and their then-partner on XX July 20XX.

e.              'PAYG summary - superannuation lump sum' from the Fund for a death benefit payment of $XXX,XXX, with $XX,XXX tax withheld, paid to the Beneficiary on XX April 20XX.

f.               Confirmation of the Beneficiary's 20XX enrolment in a university undergraduate academic program.

g.              Emails dated XX August 20XX to XX October 20XX, between the Executor of the Deceased's estate and a Health Fund stating the Date of Death and requesting that the family policy continue with the Deceased's three children (including the Beneficiary).

7.              In response to a request for further information on XX July 20XX, it was stated that the Beneficiary was living with the Deceased at the Date of Death.

8.              In response to a request for further information on XX August 20XX, the following were provided:

h.              Bank statement for the Beneficiary XX April 20XX to XX October 20XX

i.               Bank statement for the Beneficiary XX April 20XX to XX July 20XX.

9.              ATO systems confirm the Deceased's Date of Death to be XX XX 20XX.

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 paragraph 302-195(1)(a)

Income Tax Assessment Act 1997 paragraph 302-195(1)(b)

Income Tax Assessment Act 1997 paragraph 302-195(1)(d)

Income Tax Assessment Act 1997 section 302-200

Reasons for decision:

Subsection 302-60 of the ITAA 1997 provides that a superannuation lump sum death benefit received by a dependant of the deceased is not assessable income and is not exempt income.

Meaning of death benefits dependant

1.              Subsection 302-195(1) of the ITAA 1997 defines a death benefits dependant of the 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.

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

3.              The definition of death benefits dependant does not stipulate the nature or degree of the 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.

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

5.              Case law provides that the question of dependency is governed by factual and not by theoretical considerations (Kauri Timber Co (Tasmania) Pty Ltd v. Reeman (1973) 47 ALIR 184 (Kauri Timber)). As such the Commissioner does need objective evidence to demonstrate substantial regular and continuous financial support and how the applicant was reliant on the amounts provided.

6.              The definition of dependency was addressed and interpreted in the High Court case of 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.

7.              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.

8.              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 the deceased provided many gifts to his family, but did not consider that would make the appellants and their family financially dependent on the deceased.

9.              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 person's 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.

10.          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.

Application

11.          In this case, provided ATO-prefill information and ATO systems confirm that the Beneficiary was in receipt of wages and salaries totalling $X,XXX and Youth Allowance totalling $X,XXX for the 20XX-XX income year.

12.          Bank account and credit card statements provided show that the Deceased paid for essentials such as food and family health insurance, utilities including electricity, gas and water, internet, rates and household maintenance, as well as some medical and transport costs.

13.          The Deceased's bank statements show some further financial support provided to the Beneficiary, such as cash transfers totalling $XXX for the reimbursement of groceries.

14.          During the 20XX-XX income year, the Beneficiary and Deceased's bank statements show that the Beneficiary's Youth Allowance (averaging $XXX per payment) was transferred to the Deceased's NAB account. This generally occurred on a fortnightly basis, shortly after the money was first deposited to the Beneficiary's account.

15.          Cash transfers averaging $XXX were made to the Beneficiary by the Deceased on a weekly- to fortnightly-basis, appearing as deposits on the Beneficiary's bank account.

16.          There are several cash transfers from the Beneficiary to the Deceased over the 20XX-XX income year, totalling $X,XXX. These transfers generally contain a notation, including 'Computer', 'mcc part payment', 'refund for postage', 'reimb XXX for XXX's present', 'phone charger', 'watch band', 'tennis share', 'XXXroads refund'. There are three such transfers, totalling $XXX, that have no notation provided.

17.          While it is accepted that the Deceased provided financial support to the Beneficiary, it is not accepted that the level of support constituted financial dependency, particularly when it is clear that the money did not travel in one direction only.

18.          While the Deceased provided financial support to the Beneficiary, it is clear that the Beneficiary provided a level of support (though less) to the Deceased, including frequently reimbursing the Deceased for expenses initially paid by the Deceased.

19.          The Beneficiary had sufficient income from employment and a government allowance to support themselves financially and was not financially dependent on the Deceased to pay for their ordinary living expenses.

Conclusion

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

21.          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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