| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012611684721
Ruling
Subject: Death benefit - dependency
Question 1
Is the superannuation death benefit tax free as the beneficiaries are children under 18 of the deceased?
Answer
Yes
This ruling applies for the following period:
The year ending 30 June 20XX
The scheme commences on:
1 July 20YY
Relevant facts and circumstances
The Deceased passed away during the 20YY-XX financial year.
The Deceased had children (the Dependents) aged less than 18.
During the 20XX-ZZ financial year, the Deceased Estate (the Estate) received a PAYG Payment Summary for a lump sum payment from the Australian superannuation fund of the Deceased for the year ended 30 June 20XX.
The lump sum payment was considered to be a Trustee of deceased estate death benefit.
The executor has set up a trust account and subsequently a term deposit in the name of The Estate which contains the lump sum superannuation death benefits. The trust account is held for the benefit of the Dependents.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 302-10(2)
Income Tax Assessment Act 1997 Section 302-60
Income Tax Assessment Act 1997 Section 302-195
Income Tax Assessment Act 1997 Paragraph 302-195(1)(b)
Reasons for decision
Summary
1. The Dependants are death benefit dependents as defined in paragraph 302-195(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997).
2. The death benefit superannuation payments that the Dependants received are not assessable income and not exempt income as the Dependants are considered to be death benefit dependants. Any income earned by the death benefit superannuation payments while in the estate is assessable income of the estate.
Detailed reasoning
Death benefits dependant
3. 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 or not and whether the amount is paid as a lump sum superannuation death benefit or a superannuation income stream death benefit.
4. Where a person receives a superannuation death benefit and that person was a dependant of the deceased, it is not assessable income and is not exempt income.
5. Section 302-195 of the ITAA 1997 defines death benefits dependant as follows:
A death benefits dependant, of a person who has died, is:
(a) the deceased persons spouse or former spouse; or
(b) the deceased persons 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.
6. As the Dependents are aged less than 18, they are considered to be death benefits dependent under paragraph (b) of Section 302-195 of the ITAA 1997.
Taxation of death benefit superannuation payment
7. During the 20XX-ZZ financial year, the Deceased Estate (the Estate) received a lump sum payment from the Australian superannuation fund of the Deceased for the year ended 30 June 20XX.
8. The lump sum superannuation death benefits are held in the trust account set up by the Estate for the Dependants.
9. The lump sum superannuation death benefits that the Dependants received is not assessable income and not exempt income as the Dependants are considered to be a death benefit dependant.
10. Any income earned by the death benefit superannuation payments while in the estate is assessable income of the estate.