ATO ID 2014/22: Death benefits dependant - adult child caring for terminally ill parent
Date of decision: 18 July 2014
Year of income: 2007 - 2008 income year and later years
Business line: Superannuation

Issue
Can a taxpayer who is a child beneficiary over 18 years of age be a 'death benefits dependant' of the deceased for the purposes of section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision
Yes, in this case the taxpayer was considered to be a death benefits dependant for the purposes of section 302-195 of the ITAA 1997.

Facts
In this case the taxpayer (a child of the deceased) was paid a death benefit on the death of the parent. The taxpayer was over 18 years of age at the time of death. The taxpayer had given up work to care for the terminally ill parent and received no financial support from anyone, other than the parent, during that time.

Reasons for decision
Summary: Under subsection 302-195(1) of the ITAA 1997, a 'death benefits dependant' as defined includes: The definition of death benefits dependant in paragraph 302-195(1)(d) does not stipulate the nature or degree of dependency, but it is generally accepted that this refers to financial dependence and it is a condition that must exist in relation to the taxpayer at the time of the deceased's death. The taxpayer was financially dependent on the deceased at the time of death. Note: The taxpayer and parent also satisfied the interdependency relationship requirement under paragraph 302-195(1)(c) and as described in paragraphs 302-200(1)(a),(b),(c) and (d) of the ITAA 1997: that is, the taxpayer and parent had a close relationship; they lived together; the parent provided financial support for the taxpayer; and the taxpayer was providing significant care for the parent.

Legislative references: Income Tax Assessment Act 1997 section 320-195 section 302-200 paragraph 302-195(1)(d)
Subject references: death benefits dependant death benefits - superannuation benefits superannuation superannuation benefits