Private ruling: Superannuation death benefits
Date of advice: 1 July 2016
Published: August 2016
Ruling period: Year ending 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Is the Beneficiary a death benefits dependant of the Deceased? | A1: Yes

Relevant facts and circumstances: The Deceased passed away without a will. At the time of death, the Deceased was not married nor did they have any children. The Beneficiary commenced residing with the Deceased from around 200X-0X and continued to do so until the Deceased's death. The Beneficiary and the Deceased were engaged in a domestic partnership for a continuous period of over two years up until the Deceased's death. The Fund made a death benefit payment to the Estate of the Deceased (the Estate) that was comprised of a taxable component - taxed element, a taxable component - untaxed element, and a tax-free component. The superannuation death benefit received by the Estate will be distributed to the Beneficiary and to no other party. It is anticipated that the Estate will pay the superannuation death benefit to the Beneficiary and to no other party. There are no other disputes or claims on the Estate.

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 section 995-1

Reasons for decision: Summary: The Beneficiary was the spouse of the Deceased as defined under section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) just before the Deceased died. Therefore, the Beneficiary is 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 Under section 995-1 of the ITAA 1997, a spouse includes (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. The Beneficiary was residing with the Deceased from around 200X-0X and continued to do so until the Deceased's death. Furthermore, according to the facts provided in the private ruling application, the Beneficiary and the Deceased were engaged in a domestic partnership for a continuous period of over two years prior to the Deceased's death. Hence, the Beneficiary is considered a spouse of the Deceased, and is a, death benefits dependent under section 302-195 of the ITAA 1997. | Detailed Reasoning - Other relevant comments: As the Beneficiary is a death benefits dependant of the Deceased and is expected to benefit from the superannuation death benefit paid to the Estate, the superannuation death benefit will be tax free in the hands of the estate. This is due to the operation of section 302-10 and section 302-60 of the ITAA 1997. When the superannuation death benefit paid to the Estate is eventually passed on the Beneficiary, the Beneficiary will not be liable to pay income tax on the amount, as the amount will represent a distribution of the corpus (or capital) of the Estate.