Private ruling: Death benefit dependant
Date of advice: 10 July 2017
Published: November 2017
Ruling period: Income year ended 30 June 2017 | Income year ended 30 June 2018
Date scheme commenced: 1 July 2016

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

Relevant facts and circumstances: The Beneficiary is a parent of the Deceased. The Deceased is over 18 years of age. The Deceased, the Beneficiary and the Deceased’s sibling, who is also a child of the Beneficiary, owned a property (the Property) as tenants in common in equal shares. The property was subject to a mortgage. The Deceased and the Beneficiary shared a joint bank account which was used for the sole purpose of paying all the Property’s expenses including: ● mortgage repayments; ● rates; ● utility bills; and ● insurance expenses. Bank statements have been provided which evidence the shared expenses. The Deceased contributed a significant amount of money into the joint account. The Deceased had made ad hoc payments for the Beneficiary to assist them financially. The Beneficiary’s sole income is a Commonwealth aged pension. Since the Deceased’s death, the Beneficiary has relied on the financial assistance of another relative to help meet expenses. You state that the Beneficiary did not have the capacity to contribute more than what they did prior to the Deceased’s death. The Beneficiary and the Deceased were not in an interdependency relationship pursuant to section 302-200(1) of the ITAA 1997. The Trustee of the Deceased Estate received notification from the Superannuation Fund that it intends to pay a superannuation death benefit to the Estate.

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 995-1(1).

Reasons for decision: Summary: The Beneficiary is a death benefits dependant of the Deceased pursuant to section 302-195 of the ITAA 1997. | Detailed Reasoning - Death Benefits Dependant: Subsection 995-1(1) of the ITAA 1997 states that the term 'death benefits dependant' has the meaning given by section 302-195 of the ITAA 1997. Section 302-195 of the ITAA 1997 defines a death benefits dependant as follows: A death benefits dependant , of a person who has died, is: (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. As the Beneficiary is a child of the Deceased aged over 18, paragraphs 302-195(1)(a) and (b) of the ITAA 1997 do not apply. In addition, the Beneficiary was not in an 'interdependency relationship’ with the Deceased just before the Deceased died. Thus paragraph 302-195(1)(c) does not apply. Therefore, the Beneficiary must satisfy the ordinary meaning of the word 'dependant’ if they are to be treated as a death benefits dependant of the Deceased. | Detailed Reasoning - Meaning of 'dependant’: According to the Macquarie Dictionary , a 'dependant’ is: 1.one who depends on or looks to another for support, favour, etc 2. a person to whom one contributes all or a major amount of necessary financial support. Butterworth’s Australian Legal Dictionary defines 'dependant’ as 'a person who depends on another, wholly or substantially’. In the Victorian Supreme Court case of Fenton v. Batten [1949] ALR 69; [1948] VLR 422, Justice Fullager made the following comments regarding dependency: The word dependant is, in a true sense a technical term. If the evidence established that the alleged dependant relied on or relies on another as the source wholly or in part of his or her existence then dependence is established. Questions of scale of living do not enter into the matter in the absence of some such statutory enactment. In Case [2000] AATA 8, (2000) 43 ATR 1273; 2000 ATC 129, Senior Member Fayle in considering the definition of dependant in relation to section 27AAA of the Income Tax Assessment Act 1936 stated: The Act is primarily concerned with commercial and financial matters. An Act relating to the imposition assessment and collection of tax upon incomes. As such, a question of dependency should be construed within that context. The relevant question in this sense is whether the applicants were financially dependent on their son at the relevant time. Handing down the decision in Re Malek v. Federal Commissioner of Taxation Case [1999] AATA 678; (1999) 42 ATR 1203, (1999) 99 ATC 2294, Senior Member Pascoe of the Administrative Appeals Tribunal (AAT) further clarified the meaning of the word dependant, stating: In my view, the question is not to be decided by counting up the dollars required to be spent on the necessities of life for [Mrs Malek], then calculating the proportion of those dollars provided by the [son] and regarding her as a dependant only if that proportion exceeds 50%...In my view, the relevant financial support is that required to maintain the person’s normal standard of living and the question of fact to be answered is whether the alleged dependant was reliant on the regular continuous contribution of the other person to maintain that standard. In the current case, it is clear that the Deceased provided regular continuous financial support to the Beneficiary. However, what must be shown is that the Beneficiary depended or relied on that support to maintain their normal standard of living at the time of the Deceased’s death. Assessing the circumstances holistically, we consider that the Beneficiary did rely on the support provided by the Deceased to maintain their normal standard of living at the time of the Deceased’s death. Our view is based on the following: (a) the Beneficiary’s sole income is a Commonwealth aged pension; (b) the Deceased contributed a significant amount of money towards the mortgage of the Property. (c) Since the Deceased’s death, the Beneficiary has relied on the financial assistance of another relative to help meet expenses. You state that the Beneficiary did not have the capacity to contribute more than what she did prior to the Deceased’s death. (d) The Deceased had made ad hoc payments for the Beneficiary to assist them financially. Consequently, the Beneficiary is a death benefits dependant of the Deceased as defined in section 302-195 of the ITAA 1997.