Definition of child for purposes of section 295-485 of the Income Tax Assessment Act 1997

Can the reference to 'child' in paragraph 295-485(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) include a child of the deceased member aged 18 years or over (an adult child) at the time of death or payment?

Yes. A reference to 'child' in paragraph 295-485(1)(a) of the ITAA 1997 can include an adult child of the deceased member.

The superannuation fund (the Fund) is (and has been since its existence) a complying superannuation fund.

The Fund is an accumulation fund and benefits paid by the Fund comprise of certain contributions and earnings on those contributions, less expenses and tax.

The trustee of the Fund is considering whether to increase (by the tax saving amount) a superannuation lump sum payable to an adult child of the deceased because of the death of a member.

In accordance with subsection 295-485(1) of the ITAA 1997, a complying superannuation fund (or a complying approved deposit fund) can deduct an amount under that section if: (a) it pays a *superannuation lump sum because of the death of a person to the trustee of the deceased's estate or an individual who was a *spouse, former spouse or *child of the deceased at the time of death or payment; and (b) it increases the lump sum by an amount, or does not reduce the lump sum by an amount (the tax saving amount ) so that the amount of the lump sum is the amount that the fund could have paid if no tax were payable on amounts included in assessable income under Subdivision 295-C.

The term 'child' is defined for the purposes of section 295-485 of the ITAA 1997, in subsection 995-1(1) of the ITAA 1997 which extends the ordinary meaning of 'child' of a person to include a person's adopted child, step-child or ex-nuptial child. From 1 July 2008, the term 'child' of a person was further expanded to include the person's adopted child, stepchild or ex-nuptial child; a child of the person's spouse; or someone who is a child of the person within the meaning of the Family Law Act 1975.

Section 295-485 of the ITAA 1997 is a re-write of former section 279D of the Income Tax Assessment Act 1936 (ITAA 1936) which applied to certain payments made by a complying superannuation fund (or a complying approved deposit fund) to dependants of a deceased member before 1 July 2007.

Subsection 1-3(2) of the ITAA 1997 provides that differences in style or the words used in the ITAA 1997 as opposed to the ITAA 1936 are not to be taken to be a change in the ideas expressed. Further, section 15AC of the Acts Interpretation Act 1901 provides that changes in style between two Acts where the same idea is being expressed are not meant to result in a change in meaning.

The Explanatory Memorandum to the Tax Laws Amendment (Simplified Superannuation) Bill 2006 which introduced section 295-485 states at paragraphs 3.1; 3.8; 3.14 that the rewritten provisions in Division 295 of the ITAA 1997 do not change the law as it operated under Part IX of the ITAA 1936.

For the purposes of former section 279D of the ITAA 1997, a 'dependant' had the meaning given by paragraph (a) of the definition of 'dependant' in subsection 27A(1) of the ITAA 1936. Paragraph (a) included as far as relevant, 'any child' of the deceased. This may be contrasted with paragraph (b) of the same definition which included 'any child, aged less than 18 years, of the first person'.

The definition of 'child' in the ITAA 1936 was contained in subsection 6(1) which refers to the definition of 'child' in subsection 995-1(1) of the ITAA 1997

Based on the above, it is considered that the term 'child' in paragraph 295-485(1)(a) of the ITAA 1997 has the same meaning it was given for the purposes of the former section 279D of the ITAA 1936 and is extended by the updated definition of 'child' in section 995-1 of the ITAA 1997 from 1 July 2008.

Therefore, a reference to 'child' in paragraph 295-485(1)(a) of the ITAA 1997 can include any child of the deceased member, including a child aged 18 years or more at the time of death or payment.

Date of Amendment Part Comment 22 December 2014 Reason for Decision Legislative references Included the extended definition of 'child' as per section 995-1 of the ITAA 1997 which is applicable from 1 July 2008.

Date of Amendment | Part | Comment

22 December 2014 | Reason for Decision Legislative references | Included the extended definition of 'child' as per section 995-1 of the ITAA 1997 which is applicable from 1 July 2008.