Was the beneficiary a death benefits dependant of the deceased persons 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?
Yes This ruling applies for the following period 30 June 2023 The scheme commences on: 1 July 2022
: 1. The Beneficiary is the sibling of the deceased persons. 2. Deceased A and B died in 20XX. 3. The Beneficiary was not financially dependent on the Deceased as the Beneficiary received sufficient income from a self-managed superannuation fund (SMSF) and other sources. 4. Deceased A and B were not financially dependent on the Beneficiary as Deceased A and B received sufficient incomes from their SMSF and other sources. 5. The Beneficiary cared for Deceased A and B over period of approximately XX years. This care increased in the last couple of years of Deceased A and B's lives. The Beneficiary cared for Deceased A and B by providing: a. financial support, including paying for their household bills, electricity, gas, insurances, expenses associated with medical/age care aids, etc. b. domestic support, including attending to household cleaning, preparation of meals, shopping, washing, gardening, etc. c. personal care and assistance, including, organising medical appointments for Deceased A and B and taking them to these appointments; assisting with feeding, dressing, toileting and showering.
d. emotional support, including provision of comfort, company, and consoling when Deceased A and B were distressed. 8. Until their health declined, Deceased A and B also cared for the Beneficiary over period of approximately XX years by providing the Beneficiary with: a. financial support, including paying for house expenses, food, and utilities b. domestic support, including attending to household cleaning, gardening, preparation of meals, etc c. emotional support, including provision of comfort, company, and consoling when the Beneficiary was distressed. 9. The Beneficiary lived with Deceased A and B at the same property for period of approximately XX years. They were joint owners of this property. 10. Since the siblings moved together, they made commitment to live together and this relationship to be permanent. 11. The Beneficiary and Deceased A and B jointly owned all material assets, holidayed together, shared motor vehicles and social activities.
12. The Beneficiary provided medical certificates supporting that in the last couple of years, when Deceased A and B's health declined, the Beneficiary provided them with substantial personal care and assistance.
: Income Tax Assessment Act 1997 Section 302-195 Income Tax Assessment Act 1997 Section 302-200 Income Tax Assessment (1997 Act) Regulations 2021 Section 302-200.01 Income Tax Assessment (1997 Act) Regulations 2021 Section 302-200.02
: Summary: 1. An interdependency relationship as defined under section 302-200 of the ITAA 1997 existed between the Beneficiary and Deceased A and B, as all the requirements set out in the legislation have been satisfied in this case. 2. Therefore, the Beneficiary is a death benefits dependant of Deceased A and B, as defined in section 302-195 of the ITAA 1997. Detailed reasoning Meaning of death benefits dependant 3. Subsection 995-1(1) of the ITAA 1997 states that the term 'death benefits dependant' has the meaning given by section 302-195. Subsection 302-195(1) 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. 4. As the Beneficiary is the sibling of Deceased A and B, paragraphs 302-195(1)(a) and (b) of the ITAA 1997 are not applicable.
5. 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. 6. The Beneficiary was not financially dependent on the Deceased persons and therefore, paragraph 302-195(1)(d) of the ITAA 1997 is not applicable. 7. To meet the definition of a death benefits dependant, the Beneficiary must have been in an interdependency relationship with the Deceased persons, in accordance with paragraph 302-195(1)(c) of the ITAA 1997. Interdependency relationship 8. 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. 9. 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. 10. 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. 11. 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 degree of emotional support
e. the extent to which the relationship is one of mere convenience f. any evidence that the parties intend the relationship to be permanent. 12. Section 302-200.02 of the ITAR 2021 sets out the circumstances in which two people have an interdependency relationship. 13. 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. 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), 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:
i) the duration of the relationship; ii) the degree of mutual commitment to a shared life; iii) 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 matters that indicate the Beneficiary and Deceased A and B had a close personal relationship before the Deceased's deaths are: a. The Beneficiary and Deceased A and B provided each other with intensive and ongoing emotional, domestic and financial support. This level of care exceeded the care and comfort that would usually be provided by friends or flatmates. The siblings had an exceptionally close relationship. Further details of their care arrangements are provided below, under Financial Support and Domestic Support and Care.
b. The Beneficiary and Deceased A and B have lived together for approximately XX years. They jointly owned all material assets and had a strong mutual commitment to having shared lives. 22. Therefore, a close personal relationship existed between the Beneficiary and Deceased A and B and the first requirement specified in paragraph 302-200(1)(a) of the ITAA 1997 has been satisfied in this case. Living together 23. 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. 24. 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.
25. The Beneficiary and Deceased A and B lived together at the same residence for approximately XX years. They jointly owed this property. 26. Consequently, the requirement specified in paragraph 302-200(1)(b) of the ITAA 1997 has been satisfied in this case. Financial support 27. 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. 28. 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. 29. The provided evidence supports that the Beneficiary and Deceased A and B provided each other with financial support as they interchangeably paid for the various household costs, including electricity, gas, insurances, expenses associated with medical/age care aids, etc. 30. Therefore, the Beneficiary and Deceased A and B provided each other with financial support during their shared lives. 31. Consequently, paragraph 302-200(1)(c) of the ITAA 1997 has been satisfied. Domestic support and personal care
32. 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. 33. From the facts presented, the Beneficiary provided Deceased A and B with significant assistance in the last few years of Deceased A and B lives, when their mobility declined. The Beneficiary took on domestic services and also provided Deceased A and B with personal care, assisting with their mobility, personal hygiene, feeding and taking Deceased A and B to medical appointments.
34. In addition, as siblings that were living together for the last XX years, the Beneficiary and the Deceased provided each other with significant emotional support and comfort. 35. Therefore, the requirement in paragraph 302-200(1)(d) of the ITAA 1997 has been satisfied. Conclusion As all of the requirements in section 302-200 of the ITAA 1997 have been satisfied, the Beneficiary and Deceased A and B were in an interdependency relationship in the period just before Deceased A and B's deaths. As the Beneficiary was in an interdependency relationship with Deceased A and B, the Beneficiary is a death benefits dependant as defined under section 302-195 of the ITAA 1997.