Private ruling: Superannuation death benefits
Date of advice: 20 February 2017
Published: April 2017
Ruling period: Income year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Is a person (the Taxpayer) a death benefits dependant of a person who has died (the Deceased) under section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No

Relevant facts and circumstances: The Deceased died while on holidays overseas. The Deceased was not married, not in a de factor relationship and had no children. The Taxpayer is a sibling of the Deceased. The Taxpayer moved in with the Deceased three months prior to the Deceased’s death. The Taxpayer assisted the Deceased with domestic tasks by caring for their animal, helping cook meals and doing the housework. The Deceased supported the Taxpayer by allowing them to pay reduced rent and no utility bills while they were living together.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 302-195 | Income Tax Assessment Act 1997 section 302-200 | Income Tax Assessment Act 1997 subsection 302-200(1) | Income Tax Assessment Act 1997 subsection 302-200(2) | Income Tax Assessment Act 1997 subsection 302-200(3) | Income Tax Assessment Regulations 1997 subregulation 302-200.01 | Income Tax Assessment Regulations 1997 subregulation 302-200.02

Reasons for decision: Summary: The Taxpayer is not a death benefits dependant of the Deceased for the purposes of section 302-195 of the ITAA 1997. | Detailed Reasoning - Death benefits dependant: Section 302-195 of the ITAA 1997 defines 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 person just before he or she died. *To find definitions of asterisked terms, see the Dictionary, starting at 995-1. As the Taxpayer is a sibling of the Deceased, paragraphs 302-195(1)(a) and (b) of the ITAA 1997 do not apply in this case. Therefore, to conclude that the Taxpayer is a death benefits dependant of the Deceased, it must be established that the Taxpayer had an interdependency relationship with the Deceased just before the Deceased died, or that they were a dependant of the Deceased just before the Deceased died. | Detailed Reasoning - Interdependency relationship: Subsection 302-200(1) of the ITAA 1997 provides that two persons (whether or not related by family) have an interdependency relationship under that 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. In accordance with subsection 302-200(2) of the ITAA 1997, two persons may also have an interdependency relationship if they have a close personal relationship but cannot satisfy any of the other requirements of subsection 302-200(1) of the ITAA 1997 because either or both of them suffer from a physical, intellectual or psychiatric disability. Subsection 302-200(3) of the ITAA 1997 provides that matters and circumstances that are, or are not, to be taken into account in determining whether two persons have an interdependency relationship under that section may be specified in the regulations. To that effect, regulation 302-200.01 of the Income Tax Assessment Regulations 1997 (ITAR 1997) provides that the matters to be taken into account for the purposes of paragraph 302-200(3)(a) of the ITAA 1997 (where relevant) are all the circumstances of the relationship between the persons, including (in this case): (i) the duration of the relationship; and … (ii) the degree of mutual commitment to a shared life; and … (iii) the reputation and public aspects of the relationship; and (iv) the degree of emotional support; and (v) the extent to which the relationship is one of mere convenience; and … In accordance with regulation 302-200.02 of the ITAR 1997, two persons have an interdependency relationship if: (a) they have a close personal relationship; and (b) they do not satisfy the other requirements set out in subsection 302-200(1) of the Act; and (c) the reason they do not satisfy the other requirements is that they are temporarily living apart. | Detailed Reasoning - Close personal relationship: Generally, a close personal relationship as specified in subsection 302-200(1) of the ITAA 1997 would not exist between two siblings. This is because the relationship between siblings would be expected to change significantly over time and there would be no mutual commitment to a shared life between the two. However, where unusual and exceptional circumstances exist, a relationship between siblings may be treated as an interdependency relationship for the purposes of subsection 302-200(1) of the ITAA 1997. In this case, facts indicate that the relationship between the Taxpayer and the Deceased was not over and above that of a normal family relationship. The parties had lived together for a very short time; there is no evidence of a mutual commitment to a shared life and no evidence of ongoing emotional support. As such, the relationship appears to be one of mere convenience. Hence, we consider that a close personal relationship did not exist between the Taxpayer and the Deceased as required by paragraph 302-200(1)(a) of the ITAA 1997. The wording of subsection 302-200(1) of the ITAA 1997 has a cumulative effect, that is, all the conditions in that section are joined and must be read together. Therefore, for an interdependency relationship to exist, all the conditions of subsection 302-200(1) must be met. If any one of the specified conditions in that subsection is not met, there is no interdependency relationship. In this case, the first condition of subsection 302-200(1) of the ITAA 1997 is not met therefore, the Taxpayer and the Deceased did not have an interdependency relationship under section 302-200 of the ITAA 1997 just before the Deceased died. Even if it may be argued that a close personal relationship did, in fact, exist between the Deceased and the Taxpayer, although the parties were living together at the time of the Deceased’s death, the time they lived together was a relatively short time. Financial support provided by the Deceased to the Taxpayer was minimal under the circumstances; and domestic support provided by the Taxpayer for the Deceased is not of the nature contemplated by subsection 302-200(1) of the ITAA 1997. Financial support under paragraph 302-200(1)(c) of the ITAA 1997 is satisfied only if some level (not necessarily substantial) of financial support is being provided by one person (or each of them) to the other. 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 activities. Personal care services may commonly consist of assistance with mobility, personal hygiene and generally ensuring the physical and emotional comfort of a person. In view of the above, the Taxpayer did not have an interdependency relationship with the Deceased under section 302-200(1) of the ITAA 1997 just before they died. Further, based on the facts provided, there is nothing to indicate that the Taxpayer was a dependant of the Deceased. Therefore, the Taxpayer is not a death benefits dependant of the Deceased as defined in section 302-195 of the ITAA 1997.