Edited version of your written advice

Authorisation Number: 1013103420076

Date of advice: 6 October 2016

Ruling

Subject: Death benefits dependant.

Question

Are you a death benefits dependant of the deceased under section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 2014

The scheme commences on:

1 July 2013

Relevant facts and circumstances

You met your partner (the Deceased) in the 20XX-XY income year.

In early 20XY you and the Deceased began an intimate relationship.

You and the Deceased jointly leased a property in the 20XY-XY income year and resided together for a period of less than X year.

You and the Deceased jointly owned the Home and Contents Insurance Policy.

When residing together, you and the Deceased were jointly responsible for the cooking, washing, cleaning, shopping, pet upkeep and the payment of utilities.

You and the Deceased operated joint bank accounts and the Deceased was an additional cardholder on your credit card facility.

You and the Deceased jointly operated a motor vehicle. The registration and insurance policies of the motor vehicle were listed in the Deceased's name; however, you were a nominated driver.

The Deceased was the sole nominated beneficiary of your superannuation plan.

In late 20XY the Deceased asked your family for permission to marry.

You and the Deceased travelled together overseas in the 20YY-YZ income year.

You and the Deceased also travelled interstate as part of the Deceased's work commitments in the 20YY-YZ income year.

You supported the Deceased (emotionally and financially) during their illness in the 20YY-YZ income year.

The Deceased passed away in the 20YY-YZ income year.

A superannuation death benefit was paid to the estate of the Deceased (the Estate) in the 20YZ-ZZ income year.

The Estate paid you a share of the superannuation death benefit as a benefit paid to a death benefits non-dependant.

Relevant legislative provisions

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 Paragraph 302-195(1)(c)

Income Tax Assessment Act 1997 Subsection 302-200(1)

Income Tax Assessment Act 1997 Paragraph 302-200(3)(a)

Income Tax Assessment Act 1997 Section 995-1

Income Tax Assessment Regulations 1997 Subregulation 302-200.01(2)

Reasons for decision

Summary

You are a death benefits dependant of the Deceased, as an interdependency relationship existed between yourself and the Deceased before their death.

Therefore, you are considered to be a dependant of the Deceased.

Detailed reasoning

Death benefits dependant

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.

Under section 995-1 of the ITAA 1997, the spouse of an individual includes:

(a) another individual (whether of the same sex or a different sex) with whom the individual is in a relationship that is registered under a *State law or *Territory law prescribed for the purposes of section 2E of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; and

(b) another individual who, although not legally married to the individual, lives with the individual on a genuine domestic basis in a relationship as a couple.

As you do not satisfy the requirements of paragraph (a) of the definition of spouse, attention will turn to the requirements of paragraph (b).

There are many factors that determine whether you are living together on a 'genuine domestic basis'. One of the main factors of living together on a 'genuine domestic basis', is the amount of time spent living together or in a relationship. It is generally accepted by the courts that a couple have been living together in a 'married-like' way if they have been living together in a relationship as a couple for a minimum period of XX years.

The facts of your case indicate that you and the Deceased lived together for a period of less than XX years. As such, the duration of time that you and the Deceased lived together is not sufficient in this case to indicate that you were both living together as a couple on a 'genuine domestic basis'.

Therefore, you do not satisfy the requirements of paragraph (b) of the definition of spouse and attention will turn instead to paragraph 302-195(1)(c) of the definition of death benefits dependant and whether you and the Deceased had an interdependency relationship (as defined by section 302-200 of the ITAA 1997) just before they died.

Interdependency relationship

Under subsection 302-200(1) of the ITAA 1997 an interdependency relationship is defined as:

Two persons (whether or not related by family) have an interdependency relationship under this section if:

(a) they have a close personal relationship; and

(b) they live together; and

(c) one or each of them provides the other with financial support; and

(d) one or each of them provides the other with domestic support and personal care.

Subsection 302-200(2) of the ITAA 1997 states:

In addition, 2 persons (whether or not related by family) also have an interdependency relationship under this section if:

(a) they have a close personal relationship; and

(b) they do not satisfy one or more of the requirements of an interdependency relationship mentioned in paragraphs (1)(b), (c) and (d); and

(c) the reason they do not satisfy those requirements is that either or both of them suffer from a physical, intellectual or psychiatric disability.

Accordingly, all of the conditions in subsection 302-200(1) of the ITAA 1997, or alternatively subsection 302-200(2), must be satisfied for a person to be in an interdependency relationship with another person.

To assist in determining whether two persons have an interdependency relationship, paragraph 302-200(3)(a) of the ITAA 1997, states that the regulations may specify the matters that are, or are not, to be taken into account.

Subregulation 302-200.01(2) of the Income Tax Regulations 1997 (ITR 1997) states the matters to be taken into account are as follows:

(a) all of the circumstances of the relationship between the persons, including (where relevant):

(i) the duration of the relationship; and

(ii) whether or not a sexual relationship exists; and

(iii) the ownership, use and acquisition of property; and

(iv) the degree of mutual commitment to a shared life; and

(v) the care and support of children; and

(vi) the reputation and public aspects of the relationship; and

(vii) the degree of emotional support; and

(viii) the extent to which the relationship is one of mere convenience; and

(ix) any evidence suggesting that the parties intend the relationship to be permanent.

It is proposed to deal with each of the conditions in subsection 302-200(1) of the ITAA 1997 in turn.

Close personal relationship

The first requirement to be met is specified in paragraph 302-200(1)(a) of the ITAA 1997, which states that two persons (whether or not related by family) must have a close personal relationship.

A detailed explanation of subsection 302-200(1) of the ITAA 1997 is set out in the Supplementary Explanatory Memorandum (SEM) to the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2004. In discussing the meaning of close personal relationship the SEM states:

2.12 A close personal relationship will be one that involves a demonstrated and ongoing commitment to the emotional support and well-being of the two parties.

2.13 Indicators of a close personal relationship may include:

• the duration of the relationship;

• the degree of mutual commitment to a shared life;

• the reputation and public aspects of the relationship (such as whether the relationship is publicly acknowledged).

2.14 The above indicators do not form an exclusive list, nor are any of them a requirement for a close personal relationship to exist.

2.15 It is not intended that people who share accommodation for convenience (for example flatmates), or people who provide care as part of an employment relationship or on behalf of a charity should fall within the definition of close personal relationship.

The facts of this case show that you and the Deceased had an intimate relationship, and then lived together in a 'married-like' way for a period of less than X year. The facts also indicate that there was a mutual commitment to a shared life (intending to later marry), as well as a commitment to the emotional support and well-being of one another.

Therefore, it is accepted that a close personal relationship existed between yourself and the Deceased as envisaged by paragraph 302-200(1)(a) of the ITAA 1997.

Cohabitation

The second requirement to be met is specified in paragraph 302-200(1)(b) of the ITAA 1997, and states that the two persons live together.

As mentioned above, the facts show that you and the Deceased were residing together at the time of the Deceased's death.

Therefore the requirement specified in paragraph 302-200(1)(b) has been satisfied in this instance.

Financial support

The third requirement to be met is specified in paragraph 302-200(1)(c) of the ITAA 1997, and states that one or each of the two persons provides the other with financial support.

Financial support under paragraph 302-200(1)(c) is satisfied if some level (not necessarily substantial) of financial support is being provided by one person (or each of them) to the other.

Based on the facts presented, you and the Deceased jointly operated bank accounts, were both responsible for the payment of utilities, were both the owners of the relevant home contents and insurance policy and the Deceased was the sole nominated beneficiary of your superannuation plan. Further, you have also explained that you supported the Deceased emotionally and financially during their period of illness.

It is therefore accepted that paragraph 302-200(1)(c) of the ITAA 1997 has been satisfied.

Domestic support and personal care

The fourth requirement to be met is specified in paragraph 302-200(1)(d) of the ITAA 1997, and states that one or each of these two persons provides the other with domestic support and personal care. In discussing the meaning of domestic support and personal care, paragraph 2.16 of the SEM states:

Domestic support and personal care will commonly be of a frequent and ongoing nature. For example, domestic support services will consist of attending to the household shopping, cleaning, laundry and like services. Personal care services may commonly consist of assistance with mobility, personal hygiene and generally ensuring the physical and emotional comfort of a person.

The term 'personal care' was also discussed in the New South Wales Supreme Court in Dridi v. Fillmore [2001] NSWSC 319. Master Macready stated, in regards to the term 'domestic support and personal care,' that:

The expression [personal care] seems to be directed to a different level of reality such as assistance with mobility, personal hygiene and physical comfort. Such activities obviously however will include an element of emotional support.

From the facts provided you and the Deceased shared the cooking, washing and cleaning, the shopping and pet upkeep. As previously mentioned, you also provided emotional support to the Deceased during their period of illness, encouraging them to seek assistance for their illness as well as attending a program designed to help you assist the Deceased with their illness.

On the facts provided, it is considered that the requirement in paragraph 302-200(1)(d) of the ITAA 1997 has been satisfied in this instance.

From the facts presented, it is considered that an interdependency relationship in accordance with subsection 302-200(1) of the ITAA 1997 existed between yourself and the Deceased prior to, and at the time of, the Deceased's death.