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Ruling
Subject: superannuation death benefits -death benefits dependant
Question:
Are you a death benefits dependant of the deceased?
Is any part of the superannuation death benefit included in your assessable income for the 2011-12 income year?
Advice/Answer
Yes
No
This ruling applies for the following period:
Year ending 30 June 2012
The scheme commences on:
1 July 2011
Relevant facts and circumstances
Your spouse (the deceased) was a member of a superannuation fund (the Fund) and died in the 2011-12 income year.
The Fund wrote to you to submit an application for a death benefit.
A few months later, you applied to the Fund for the death benefit.
You are the only dependant of the deceased.
The Fund gave you the lump sum payment after establishing that you are the only dependant of the deceased.
You received a letter from the Fund with a cheque.
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).
Income Tax Assessment Act 1997 Section 307-5
Reasons for decision
Summary
The lump sum payment paid to you by the Fund will be considered a superannuation lump sum paid to a death benefits dependant. The superannuation lump sum is not assessable income and is not exempt income; and therefore not subject to tax.
Detailed reasoning
Subsection 302-195(1) of the Income Tax Assessment Act 1997 (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.
As you are the spouse of the deceased, you will be considered a death benefits dependant in accordance with paragraph 302-195(1)(a) of the ITAA 1997.
A superannuation death benefit is a payment of a superannuation benefit you receive from a superannuation fund after another person's death because the other person was a fund member (section 307-5 of the ITAA 1997).
A superannuation lump sum that you receive because of the death of a person of whom you are a death benefits dependant is not assessable income and is not exempt income in accordance with section 302-60 of the ITAA 1997.
Accordingly, all of the superannuation lump sum you received from the Fund will be tax free.