ATO ID 2014/6: Death benefits dependant - adult child on youth allowance
Date of decision: 12 February 2014
Year of income: 2007 - 2008 income year and later income years
Business line: Superannuation

Issue
Is a taxpayer in receipt of Youth Allowance at the time of the death of a parent, a death benefits dependant of the parent for the purpose of section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
Yes. On the facts given, the taxpayer is a death benefits dependant of the parent for the purpose of section 302-195 of the ITAA 1997.

Facts
The taxpayer receives a death benefit from the parent's superannuation fund after the parent's death. The taxpayer is over 18 years old at the time, was living at home with the parent until the parent's death and receiving Youth Allowance payments from Centrelink.

Reasons for decision
Summary: The term 'death benefits dependant' is defined in subsection 302-195(1) of the ITAA 1997. Paragraph 302-195(1)(d) states that a death benefits dependant, of a person who has died, is any other person who was a dependant of the deceased person just before he or she died. Dictionary definitions of 'dependant' make reference to substantial financial support. That dependency involves substantial financial support or maintenance is supported by passages in the Explanatory Memorandum to the Income Tax Assessment Amendment Bill (No.3) 1984 and Explanatory Memorandum for Taxation Laws Amendment Bill (No. 5) 1987. The determination of financial support is a question of fact. The Youth Allowance payments the taxpayer received were calculated at a lower 'at home' rate as opposed to the higher 'independent' rate. This indicates that the taxpayer was substantially financially dependent. A comparison of the level of financial support provided by the taxpayer's parent with that provided by the Youth Allowance payments also indicates that the taxpayer was financially dependent.

Legislative references: Income Tax Assessment Act 1997 section 302-195 subsection 302-195(1) paragraph 302-195(1)(d)
Other references: Explanatory Memorandum for Income Tax Assessment Amendment Bill (No. 3) 1984 Explanatory Memorandum for Taxation Laws Amendment Bill (No. 5) 1987
Subject references: Death benefits dependant Death benefits - superannuation benefits Superannuation Superannuation benefits