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1 Was the beneficiary a death benefits dependant of the deceased person according to section 302-195 of the Income Tax Assessment Act 1997 (ITAA 1997), due to being in an interdependency relationship with the deceased under section 302-200 of the ITAA 1997?

No This ruling applies for the following period 1 July 20YY to 30 June 20YY The scheme commences on: 1 July 20YY

: 1.            The Beneficiary is the parent of the Deceased. 2.            The Deceased died in month 20XX, at the age of XX years. 3.            You applied for a private ruling on XX month 20XX. 4.            You provided the following documents in support of your application: a.    a statement with the below: •           the Deceased married on XX month 20XX, which produced XX children (all minor at date of death) •           the Deceased separated on month 20XX and divorced on XX month 20XX •           after the separation, the Deceased moved into an apartment and subsequently moved in with the Beneficiary in month 20XX •           the Deceased was diagnosed with terminal illness XXXX 20XX •           in month 20XX, the Deceased was diagnosed as having cognitive issues and ceased working •           the Deceased resided with the Beneficiary from month 20XX until they were admitted to hospital during XXX and XXX 20XX, and they were transferred into palliative care in XXX 20XX until their death in XXX 20XX •           the Beneficiary did not receive a carer's allowance for the Deceased •           the Beneficiary took out a $XX loan to help pay for the Deceased's debts

•           both parties attended XXXXX several times a week and XXXXX together •           both parties provided each other emotional support and companionship during periods of illness and when guidance and support to deal with family matters was required •           the Deceased received a XXXXX in 20XX which was used to repay the Beneficiary •           the Beneficiary assisted the Deceased by providing: o                  domestic support, including: ­                       accompanying the Deceased to hospital appointments for support, ­                       paying for an Uber to transport the Deceased home if unable to attend appointments o                  personal care and assistance, including: ­                       assisting with getting in and out of bed, ­                       assisting with pain management, ­                       assisting when the Deceased would fall out of bed, ­                       paying for an Uber to transport the Deceased home if unable to attend appointments o                  financial support, including paying for: ­                       debts, including credit card and personal loans ­                       medical expenses,

­                       food, ­                       utilities, ­                       clothing, ­                       transport expenses, including taxi/Uber, ­                       motor vehicle expenses, including insurance, ­                       grooming expenses, ­                       the Deceased assisted the Beneficiary by providing: o                  domestic support, including: ­                       driving the Beneficiary to errands, appointments, to and from family and friends ­                       attending to household shopping ­                       household assistance, including lawn and vegetable garden upkeep b.    Death Certificate for the Deceased c.    Correspondence from XX, dated XX month 20XX d.    Correspondence from XX, dated XX month 20XX e.    Transaction details from the Beneficiary's XX online banking which shows the below: •                     Car registration payment to the Deceased, made in month 20XX •                     Radiotherapy and medical costs for the Deceased, paid in month 20XX f.     XX Bank personal loan default notice, with outstanding balance of $XX

g.    XX bank customer receipts, for amounts of $XX, $XX and $XX to the Deceased h.    XX Bank XX account, i.    XX correspondence, dated XX month 20XX with payment in arrears of $XX j.      Statement of account for period XX month 20XX to XX month 20XX for the Beneficiary which shows the below: •       transfers of $XX, $XX and $XX made on XX month 20XX k.    XX insurance correspondence for the Deceased, l.      XX correspondence for the Deceased with the below details: •       address: XX •       period of insurance: XX month 20XX - XX month 20XX m.   XX Super excerpts showing 3 different addresses for the Deceased: n.    Statutory Declaration from the Beneficiary which states: •       as per information provided on statement along with: o            the catalyst for the Deceased moving in with the Beneficiary was due to financial stress 5.            In month 20XX, the Deceased was diagnosed with a terminal illness 6.            The Beneficiary was not financially dependent on the Deceased as the Beneficiary received sufficient financial support from:

a)    Centrelink benefits from age pension of $XX, $XX, $XX, $XX, $XX, $XX, $XX for the 20XX, 20XX, 20XX, 20XX, 20XX, 20XX and 20XX income years, respectively. 7.            The Deceased was financially dependent on the Beneficiary as the Deceased person received sufficient income from: a.    employment as a XX for XX, XX and XX, providing income of $XX, $XX, $XX for the 20XX, 20XX and 20XX income years, respectively. 8.            The Beneficiary lived with the Deceased from around month 20XX to month 20XX.

: Income Tax Assessment Act 1997 section 302-195 Income Tax Assessment Act 1997 section 302-200

: Issue: Death Benefits Dependant - Interdependency Relationship Question: Was XXX (the Beneficiary) a death benefit dependant of XXX (the Deceased) according to section 302-195 of the Income Tax Assessment Act 1997 (ITAA1997), due to being in an interdependency relationship with the Deceased under section 302-200 of the ITAA 1997? Summary: 1.            An interdependency relationship as defined under section 302-200 of the ITAA 1997 did not exist between the Deceased and the Beneficiary, as all of the requirements set out in the legislation have not been satisfied in this case. 2.            Therefore, the Beneficiary is not a death benefits dependant of the Deceased as defined in section 302-195 of the ITAA 1997. 3.            Consequently, the taxable component of the superannuation lump sum death benefit paid to the Beneficiary is assessable income, taxed under section 302-145 of the ITAA 1997. Detailed reasoning Meaning of death benefits dependant

1.            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. Subsection 302-195(1) 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 person just before he or she died. 2.            As the Beneficiary is the parent of the Deceased, paragraphs 302-195(1)(a) and (b) of the ITAA 1997 are not applicable. 3.            The definition of death benefits dependant does not stipulate the nature or degree of dependency required to be a dependant of the deceased person in paragraph 302-195(1)(d) of the ITAA 1997. However, it is generally accepted that this paragraph refers to financial dependence.

4.            The Beneficiary was not financially dependent on the Deceased person and therefore, paragraph 302-195(1)(d) of the ITAA 1997 is not applicable. 5.            To meet the definition of a death benefits dependant, the Beneficiary must have been in an interdependency relationship with the Deceased, in accordance with paragraph 302-195(1)(c) of the ITAA 1997. Interdependency relationship 6.            Under subsection 302-200(1) of the ITAA 1997, an interdependency relationship is defined as: Two persons (whether or not related by family) have an interdependency relationship under this 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. 7.            Subsection 302-200(2) of the ITAA 1997 states: In addition, 2 persons (whether or not related by family) also have an interdependency relationship under this section if: a.    they have a close personal relationship; and

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, intellectual or psychiatric disability. 8.            To assist in determining whether two people have an interdependency relationship, paragraph 302-200(3)(a) of the ITAA 1997 provides that the regulations may specify the matters that are or are not to be taken into account. 9.            Subsection 302-200.01(2) of the Income Tax Assessment (1997 Act) Regulations 2021 (ITAR 2021) states the matters to be taken into account. These matters are all of the circumstances of the relationship between the persons, including (where relevant): a.    the duration of the relationship b.    the ownership, use and acquisition of property c.    the degree of mutual commitment to a shared life d.    the reputation and public aspects of the relationship e.    the degree of emotional support f.     the extent to which the relationship is one of mere convenience g.    any evidence that the parties intend the relationship to be permanent; and

h.    the existence of a statutory declaration signed by one of the persons to the effect that the person is, or (in the case of a statutory declaration made after the end of the relationship) was in an interdependency relationship with the other person. 10.         Paragraph 302-200(3)(b) of the ITAA 1997 states that the regulations may specify the circumstances in which two people have, or do not have an interdependency relationship. 11.         Section 302-200.02 of the ITAR 2021 sets out the circumstances in which two people have an interdependency relationship. 12.         Subsection 302-200.02(2) of the ITAR 2021 provides that an interdependency relationship exists between two people where: a.    they satisfy the requirements of paragraphs 302-200(1)(a) to (c) of the ITAA 1997; and b.    one or both of them provides the other with support and care of a type and quality normally provided in a close personal relationship rather than by a mere friend or flatmate, for example one person provides significant care for the other person when they are unwell or suffering emotionally.

13.         Subsections 302-200.02(3) and (4) of the ITAR 2021 provide that an interdependency relationship also exists between two people where: a.    they have a close personal relationship; and b.    they do not satisfy one or more of the other requirements set out in subsection 302-200(1) of the ITAA 1997 because: i)              they are temporarily living apart, for example because one of them is temporarily working overseas or in gaol; or ii)             one (or both) of them suffers from a disability. 14.         Subsection 302-200.02(5) of the ITAR 2021 states that two persons do not have an interdependency relationship if one of them provides domestic support and personal care to the other: a.    under an employment contract or a contract for services; or b.    on behalf of another person or organisation such as a government agency, a body corporate or a benevolent or charitable organisation.

15.         All of the conditions in subsection 302-200(1) of the ITAA 1997, or alternatively, subsection 302-200(2) of the ITAA 1997, or one of the tests in section 302-200.02 of the ITAR 2021 must be satisfied for a person to be in an interdependency relationship with another person. We deal with each condition in turn, to establish if an interdependency relationship existed. Close personal relationship 16.         The first requirement to be met is specified in paragraph 302-200(1)(a) of the ITAA 1997, which states that the two persons (whether or not related by family) must have a close personal relationship. 17.         This requirement is common to all of the tests specified in section 302-200 of the ITAA 1997 and section 302-200.02 of the ITAR 2021. 18.         A detailed explanation of subsection 302-200(1) of the ITAA 1997 is set out in the Supplementary Explanatory Memorandum (SEM) to the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2004, which states: a.    A close personal relationship will be one that involves a demonstrated and ongoing commitment to the emotional support and well-being of the two parties.

b.    Indicators of a close personal relationship may include: iii)           the duration of the relationship; iv)           the degree of mutual commitment to a shared life; v)            the reputation and public aspects of the relationship (such as whether the relationship is publicly acknowledged). 19.         The above indicators are not an exclusive list and none of them are required for a close personal relationship to exist. 20.         People who share accommodation for convenience (such as flatmates) or people who provide care as part of an employment relationship or on behalf of a charity are not intended to fall within the definition of a close personal relationship 21.         The relationship between the Beneficiary and the Deceased was not over and beyond a normal family relationship between a parent and an adult child. 22.         It was not the case that the Deceased had always lived with the Beneficiary and intended to always do so.

23.         While both parties lived together for a long period of time, the Deceased had lived apart from the Beneficiary for a reasonable part of their life which is evidenced by correspondence provided showing different addresses for the Deceased. 24.         While financial support was provided, it is not considered unusual between a parent and an adult child. 25.         Therefore, a close personal relationship did not exist between the Beneficiary and the Deceased and the first requirement specified in paragraph 302-200(1)(a) of the ITAA 1997 has not been satisfied in this case. Living together 26.         The second requirement to be met is specified in paragraph 302-200(1)(b) of the ITAA 1997 and states that two interdependent persons (whether or not related by family) live together.

27.         The term 'live' is not defined in the ITAA 1997 or accompanying regulations. According to the Macquarie Dictionary, the term 'live' means to dwell or reside. The term 'reside' is defined as the action of dwelling in a particular place permanently or for a considerable time. In the context of paragraph 302-200(1)(b) of the ITAA 1997, the living arrangements must have some degree of permanency that is only disturbed by the death of one of the persons. 28.         Prior to the Deceased's death, the Beneficiary and the Deceased lived together from month 20XX to month 20XX. 29.         Documentation provided, in the form of bank correspondence, shows the Deceased residing at the same residence as the Beneficiary at date of death. 30.         The Deceased moved in with the Beneficiary due to financial reasons and subsequently their medical diagnosis. 31.         Consequently, the requirement specified in paragraph 302-200(1)(b) of the ITAA 1997 has been satisfied in this case. Financial support

32.         The third requirement to be met is specified in paragraph 302-200(1)(c) of the ITAA 1997, which states that one or each of these two persons provides the other with financial support. 33.         Financial support under paragraph 302-200(1)(c) of the ITAA 1997 is satisfied if some level of financial support (not necessarily substantial) is being provided by one person (or each of them) to the other. 34.         From the facts presented, the Beneficiary had sufficient income from government welfare payments to support themselves financially and was not financially dependent on the Deceased to pay for all their living expenses. 35.         The Deceased had sufficient income from employment to support themselves financially and was not financially dependent on the Beneficiary prior to their medical diagnosis. 36.         The Beneficiary obtained a personal loan to help the Deceased pay off outstanding debts. 37.         It is acceptable that a level of financial support was present in the relationship prior to the Deceased's illness and subsequent passing.

38.         However, 'financial support' does not equate with financial dependency. The level of financial support required does not have to be substantial. 39.         Therefore, the Beneficiary provided the Deceased with financial support during the final years of the Deceased's life. 40.         Consequently, paragraph 302-200(1)(c) of the ITAA 1997 has been satisfied. Domestic support and personal care 41.         The fourth requirement to be met is specified in paragraph 302-200(1)(d) of the ITAA 1997, which states that one or each of these two persons provides the other with domestic support and personal care. In discussing the meaning of domestic support and personal care, paragraph 2.16 of the SEM states: a.    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 services. Personal care services may commonly consist of assistance with mobility, personal hygiene and generally ensuring the physical and emotional comfort of a person.

42.         Statement and statutory declaration provided contends that the Beneficiary provided the Deceased with some level of domestic support and personal care, which includes general household responsibilities and personal care assistance. 43.         In addition, the Beneficiary and the Deceased provided each other with significant emotional support and comfort. 44.         Therefore, the requirement in paragraph 302-200(1)(d) of the ITAA 1997 has been satisfied. Conclusion 45.         As all of the requirements in section 302-200 of the ITAA 1997 have not been satisfied, the Deceased and Beneficiary were not in an interdependency relationship in the period just before the Deceased's death. As the Beneficiary was not in an interdependency relationship with the Deceased, the Beneficiary is not a death benefits dependant as defined under section 302-195 of the ITAA 1997.