Private ruling: Taxation of superannuation death benefits
Date of advice: 9 April 2020
Published: May 2020
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is a person (the Beneficiary) a death benefits dependant of a person who has died (the Deceased) by virtue of being a former spouse of the Deceased in accordance with section 302-195(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes

Relevant facts and circumstances: The Deceased died intestate in the 20XX-XX income year. Letters of administration were granted to the Deceased's parent. The Deceased and the Beneficiary met in 20XX. An affidavit sworn by the Beneficiary states the following: · The Deceased moved into the Beneficiary's home. · Upon moving in together, they opened two joint bank accounts one for daily expenses and the other a term deposit. · The Beneficiary and the Deceased jointly leased a property. · The Beneficiary and the Deceased jointly purchased a property off the plan. However, the deposit was refunded as the developer did not complete construction. · The Deceased and the Beneficiary were listed as owners of a pet dog. · In 20XX, the Deceased moved out of the rental property and into a separate property nearby as the Beneficiary was concerned that the Deceased's drug use was affecting the Beneficiary's child. · After the Deceased moved out, they continued to see the Beneficiary most days a week. The Deceased intended to move back into the rented property once the Beneficiary's child had moved out. · The Deceased and the Beneficiary continued to share and combine their finances after the Deceased moved out. An affidavit sworn by the Deceased's parent states that: · The Deceased and the Beneficiary held a joint bank account while living together. · The Deceased moved out of the rented property early than the Beneficiary claimed. · The property subsequently rented by the Deceased was fully furnished and all the Deceased's possessions were located at the new property. · The relationship between the Deceased and the Beneficiary was ended when the Deceased moved out, with no intention of the Deceased returning to live with the Beneficiary. · After their separation, the Beneficiary and the Deceased maintained separate bank accounts. The joint account was only used twice after the separation and the Beneficiary subsequently closed the joint bank account. The Deceased was a shareholder in the company that conducted the Beneficiary's business, and the Deceased's property was used as security for business loans to the Beneficiary's business. The Deceased completed a Death Benefits Binding Nomination Form nominating the Beneficiary as their beneficiary. In a letter, the trustee for the Superannuation Fund (the Fund) advised that it would pay the death benefits to the Deceased Estate as the Beneficiary was not considered to meet the definition of a 'dependant' under the Superannuation Industry (Supervision) Act 1993 . Statutory Declarations have been provided which state that the Deceased and the Beneficiary were in a committed relationship. The Beneficiary did not attend the Deceased's funeral. The trustee of the Fund paid out the death benefits in late 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 , section 302-195. | Income Tax Assessment Act 1997, section 995-1.

Reasons for decision: Summary: The Beneficiary is a death benefits dependant of the Deceased for the purposes of section 302-195 of the ITAA 1997. | Detailed Reasoning - Detailed Reasoning: Subsection 302-195(1) of the ITAA 1997 defines a death benefits dependant of a person who has died as: (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 just before he or she died. *To find definitions of asterisked terms, see the Dictionary, starting at 995-1. For the purposes of this section, the meaning of the term 'spouse' is defined in section 995.1 of the ITAA 1997 as: (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. The facts provided establish that the Beneficiary and the Deceased lived together as a couple for a period of one year and XX months until approximately XX months before the Deceased's death. The matters that indicate that the Beneficiary and the Deceased lived together on a genuine domestic basis are: · The Deceased and the Beneficiary jointly leased the rental Property in which they lived in together. · The Deceased and the Beneficiary jointly purchased a property. · While living together, the Beneficiary and the Deceased opened a joint bank account and a joint term deposit. · Statutory Declarations have been provided by the Beneficiary that attest to the loving nature of the relationship. Therefore, the Beneficiary is considered to be a 'former spouse' of the Deceased pursuant to paragraph 302-195(1)(a) of the ITAA 1997. Consequently, the Beneficiary is considered to be a death benefits dependant of the Deceased for the purposes of section 302-195 of the ITAA 1997.