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Ruling

Subject: Superannuation death benefits - death benefits dependent

Question 1

Will the lump sum superannuation benefit paid on the death of the member to the member's spouse be exempt from tax if it is paid more than six months after the death of the member?

Answer

Yes

This ruling applies for the following periods:

Year ending 30 June 2011

The scheme commences on:

1 July 2010

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 Superannuation Fund (the Fund) had two members, the deceased and his widow.

The deceased who was a trustee and member of the abovementioned superannuation fund, died in February 2010.

The surviving spouse, (who is also trustee and member of the abovementioned superannuation fund) was unable to finalise the paperwork of the estate as she had difficulty in locating the deceased's paperwork and financial affairs.

The widow has now located all the relevant information to complete the death payment for the deceased. However, the payment will be made outside the six month time frame.

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).

Summary

A superannuation lump sum paid to the widow, as the spouse of the deceased, will be considered a superannuation lump sum paid to 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.

This is the case even when a superannuation lump sum is paid more than six months after the date of death.

Reasons for decision

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, the widow, as the spouse of the deceased member and beneficiary of the assets of the Fund, will be considered a death benefits dependant in accordance with paragraph 302-195(1)(a) of the ITAA 1997.

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.

There are no legislative provisions which impose a timeframe within which the superannuation lump sum to a death benefits dependant is to be paid.