Private ruling: Superannuation death benefits
Date of advice: 6 December 2016
Published: May 2017
Ruling period: Income year ended 30 June 2016.
Date scheme commenced: 1 July 2015

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) by virtue of being in an interdependency relationship pursuant to section 302-200 of the ITAA 1997 with the Deceased? | A1: Yes

Relevant facts and circumstances: The Beneficiary was a friend of the Deceased and had known the Deceased for many years. The Deceased never married, had no spouse or children and did not have any relatives in Australia. The Deceased suffered from more than one illness. The ongoing and progressive effect of the illnesses restricted the Deceased's ability to perform everyday physical tasks and, as their health declined, required ongoing care and support. The Deceased lived with the Beneficiary for some years before being moved into palliative care. The Deceased's sole source of income was a business which the Beneficiary managed and maintained during the Deceased's illness. The Beneficiary provided the Deceased with ongoing financial and domestic support and personal care, including the following: ● contributing to living expenses such as household bills and groceries; ● caring for the Deceased by helping them with showering, toileting, personal grooming, dressing and providing the Deceased with meals; ● assisting the Deceased with routine domestic tasks such as shopping, laundry, cleaning and collecting the Deceased prescription medication; ● providing the Deceased with companionship and emotional support; and ● transporting and accompanying the Deceased to and from medical appointments. Following the Deceased's admission into palliative care, the Beneficiary visited the Deceased daily and undertook routine daily tasks on behalf of the Deceased such as doing laundry and shopping as well as liaising with the Deceased doctors. The Deceased provided the Beneficiary with ongoing financial and domestic support and personal care including the following: ● contributing towards the groceries and household bills; and ● looking after the Beneficiary's children. The Deceased's superannuation fund paid a lump sum death benefit (the Benefit) to the Trustee of the Deceased Estate (the Trustee) which was subsequently distributed to the Beneficiary by the Trustee.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 302‑60 | Income Tax Assessment Act 1997 Section 302-195 | Income Tax Assessment Act 1997 Section 302-200 | Income Tax Assessment Regulations 1997 Regulation 302-200.01.

Reasons for decision: Summary: An interdependency relationship as defined under subsection 302-200(1) of the ITAA 1997 existed between the Deceased and the Beneficiary just before the Deceased died. Therefore, the Beneficiary is a death benefits dependant of the Deceased as defined in section 302-195 of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: Section 302-60 of the ITAA 1997 states: A superannuation lump sum that you receive because of the death of a person of whom you are a death benefits dependant is not assessable income and is not exempt income. 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. For the Beneficiary to be a death benefits dependant of the Deceased, as paragraphs 302-195(1)(a) and (b) of the ITAA 1997 do not apply in this case, it must be established that the Beneficiary was in an 'interdependency relationship' with the Deceased, or that the Beneficiary was a 'dependant' of the Deceased just before the Deceased died. | Detailed Reasoning - Interdependency relationship: Subsection 302-200(1) of the ITAA 1997 states that two persons (whether or not related by family) have an interdependency relationship 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. Subsection 302-200(3) of the ITAA 1997 provides that the matters and circumstances which are to be considered in determining whether and interdependency relationship exists between two persons under that section may specified in the regulations. To that effect, regulation 302-200.01 of the Income Tax Assessment Regulation 1997 (ITAR 1997) state that in considered subparagraphs 302-200(3)(a) of the ITAA1997, matters to be taken into account are all the relevant circumstances of the relationship between the persons, including (in this case): (a) the duration of the relationship; and (b) the degree of mutual commitment to a shared life; and (c) the degree of emotional support; and (d) the extent to which he relationship is one of mere convenience. The facts provided indicate that the Beneficiary and the Deceased had a close personal relationship in that: ● the Deceased lived with the Beneficiary for a number of years, that is, during the period of the Deceased's illness up to the date the Deceased moved into palliative care. During this period the Beneficiary provided the Deceased with significant care; ● following the Deceased's admission into palliative care, the Beneficiary continued to visit the Deceased daily and undertake routine daily tasks on behalf of the Deceased such as doing their laundry and shopping as well as liaise with the Deceased's doctors; ● the Beneficiary managed and maintained the Deceased's business, which was the Deceased's only source of income, for the duration of the Deceased's illness; and ● there is nothing to indicate that the relationship was one of mere convenience. | Detailed Reasoning - Living together: As stated above, the Deceased lived with the Beneficiary for a number of years before moving into palliative care shortly before the Deceased's death. Accordingly, paragraph 302-200(1)(b) is not satisfied as the Deceased and the Beneficiary were not living together at the time of the Deceased's death. However, subsection 302-200(2) of the ITAA 1997 states that in additional to subsection 302-200(1), two persons will have an interdependency relationship if: (a) they have a close personal relationship; (b) they do not satisfy one or more of the requirements of an interdependency relationship mentioned in paragraphs (1)(b),(c) and (d); and (c) the reason they do not satisfy those requirements is that either or both of them suffer from a physical, mental or psychiatric disability. In this case it has been determined that the Deceased and the Beneficiary had a close personal relationship. Although the Deceased was admitted into palliative care shortly before death, the Deceased can be considered to have suffered from a physical disability due to the nature and extent of her illness. Thus, the Deceased and the Beneficiary will still be considered to have been in an interdependency relationship. | Detailed Reasoning - Financial support: Financial support under paragraph 302-200(1)(c) of the ITAA 1997 is satisfied if some level (not necessarily substantial) of financial support is being provided to one person (or each of them) to the other. The facts show that the Beneficiary provided the Deceased with accommodation, food and care free of charge and that the Deceased contributed some money towards household expenses from time to time. | Detailed Reasoning - Domestic support and personal care: Domestic support and personal care will commonly be of a frequent and ongoing nature. For example, domestic support services will consist of attention to the household shopping, cleaning, laundry and like services. Personal care services may commonly consist of assistance with mobility, personal hygiene and generally ensuring the physical and emotional comfort of a person. The facts presented in this case show that the Beneficiary provided domestic support and personal care to the Deceased on an ongoing basis. This consisted of undertaking household shopping, completing routine domestic tasks for the Deceased and the Beneficiary providing the Deceased with personal care which included showering, toileting and dressing the Deceased. The Beneficiary continued to provide this support and care to the Deceased after the Deceased moved into palliative care by visiting daily to provide emotional support and companionship and assisting with routine domestic tasks. Based on the above, the Beneficiary meets all the requirements of an interdependency relationship for the purposes of section 300-200 of the ITAA 1997. Therefore, the Beneficiary is a death benefits dependant of the Deceased for the purposes of section 302-195 of the ITAA 1997.