Issue
Will the step-child of a test individual remain a member of the test individual's family pursuant to section 272-95 of Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) after the test individual's spouse dies?
Decision
No. The child will cease to be the step-child of the test individual after the death of the test individual's spouse.
Facts
A trustee of a trust has made a family trust election pursuant to section 272-80 of Schedule 2F to the ITAA 1936 which is in force and has specified X as the test individual.
X's spouse has a child, Y, from a previous relationship, X's step-child. Since making the family trust election, X's spouse has died.
X has not formally adopted the child under any state or territory adoption law.
Reasons for Decision
As defined by section 272-95 of Schedule 2F to the ITAA 1936 the family of the test individual includes the child of the test individual.
'Child' is defined in subsection 6(1) of the ITAA 1936 as: ...in relation to a person, includes an adopted child, a step-child or an ex-nuptial child of that person.
The term 'step-child' is not defined in the ITAA 1936 or the Income Tax Assessment Act 1997 . The Macquarie Dictionary , 2001, rev. 3rd edn, The Macquarie Library Ltd Pty, NSW defines step-child as: a child of a husband or wife by a former marriage
The definition of 'step-child' was considered in IR Commrs v. AB Russell (1955) 36 TC 83 to mean a son or daughter by a former marriage of the husband or wife even though the real parent may still be alive.
These definitions do not consider the situation where the spouse of the step-parent dies.
Andrews CJ in Re Burt (1988) 1 Qd R 23 at 24 considers the situation in the following statement: I am satisfied that the relationship of affinity between step-parent and stepchild which comes into being with the marriage of the child's natural parent with the step-parent depends for its continued existence upon the continuity of that marriage and that it ceases with the termination of that marriage whether by death or divorce.
Consequently, Y is not considered to be the 'step-child' of the test individual. Further, as Y ceases to be a 'child' as defined by subsection 6(1) of the ITAA 1936, Y is not a member of the test individual's family for the purposes of section 272-95 of Schedule 2F to the ITAA 1936.