Issue
Is the spouse of a family member of the test individual still a member of the test individual's family as defined by section 272-95 of Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) after the death of that family member?
Decision
Yes. The spouse of a family member of the test individual remains a member of the test individual's family as defined by section 272-95 of Schedule 2F to the ITAA 1936 after the death of that family member. They will cease to be a family member if they remarry or enter into a defacto relationship.
Facts
A family trust election is made pursuant to section 272-80 of Schedule 2F to the ITAA 1936 after the death of the test individual's brother. The brother had a spouse at the time of his death.
Reasons for Decision
Section 272-95 of Schedule 2F to the ITAA 1936 provides that:
The "family" of an individual (the "test individual") consists of all of the following (if applicable): (a) any parent, grandparent, brother, sister, nephew, niece, child, or child of a child, of: (i) the test individual; or (ii) the test individual's spouse; (b) the spouse of the test individual or of anyone who is a member of the test individual's family because of paragraph (a). Child and spouse are defined in subsection 6(1). [This definition applies with effect from 7:30 pm by legal time in the Australian Capital Territory on 13 May 1997]
Subsection 6(1) of the ITAA 1936 defines 'spouse' as including 'another person who, although not legally married to the person, lives with the person on a bona fide domestic basis as the husband or wife of the person'.
Where an individual was the spouse of a family member of the test individual as defined by section 272-95 of Schedule 2F to the ITAA 1936 at the time of the family member's death, the individual will be considered to remain the spouse of the family member within the meaning of section 272-95 until such time as the individual begins to have a new spouse.
Therefore, if the individual in question enters into a 'marital type' relationship (by either remarrying or entering into a de facto relationship) then at that point in time the individual will cease to be the 'spouse' of the deceased family member. Accordingly, the individual would no longer be regarded as a 'family' member for the purposes of section 272-95 of Schedule 2F to the ITAA 1936.