1: Was the Beneficiary a death benefits dependant of the Deceased 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: 30 June 2025 The scheme commenced on: 1 July 2024
: The Beneficiary is the adult child of the Deceased. The Deceased died on XX XX 20XX (Date of Death). The Beneficiary was born on XX XX 19XX and was therefore older than 18 years when the Deceased died. On XX XX 20XX, the legal personal representative (LPR) of the Deceased received a death benefit payment of $XXX,XXX from the Deceased's superannuation fund, XXXXXXXX. No tax was withheld from this payment. On XX XX 20XX the Beneficiary applied for a private ruling on whether they were a death benefits dependant of the Deceased, due to being in an interdependency relationship with the Deceased. In support of the application, the following documents were provided: • A signed and authorised statutory declaration (Declaration) by the Beneficiary, dated XX XX 20XX and providing statements about the Deceased, including the nature of the Deceased's relationship with the Beneficiary. Statements contained in the Declaration included: i The Deceased had a history of depression and anxiety and was medicated for depression.
ii After their parents' separation, the Beneficiary (aged XX or XX), chose to primarily live with the Deceased, as the Deceased was struggling with the separation and being alone. iii In early 20XX, the Beneficiary moved out, returning in September 20XX. The Beneficiary moved out again around March 20XX. iv In November 20XX, the Beneficiary (along with their partner) moved into the Deceased's home permanently. v The Deceased was not motivated to maintain the home or do the housework, and lived a hermit-like existence. They worked but did not participate in social activities. They would occasionally walk by themself but otherwise would not leave the house, except for appointments. vi The Deceased left their job late 20XX or early 20XX, with the Beneficiary's understanding being that they (the Deceased) was on a JobSeeker payment from that time on. vii The Beneficiary and their partner paid $XXX per week as a contribution towards household expenses, either by bank transfer or by cash, with extra money being provided for water or power bills occasionally.
viii The Beneficiary paid for all firewood. They would also split and stack the firewood. ix The Deceased did not generally buy food/groceries; this was primarily the responsibility of the Beneficiary. x From May 20XX to November 20XX the Beneficiary spent $X,XXX on groceries, averaging $XXX per week. xi The Beneficiary and their partner cooked most nights and always made a meal for the Deceased. xii The Beneficiary's partner often provided lunch for the Deceased and they were always included when buying takeaway food. xiii The Beneficiary maintained all the lawns and did most of the household upkeep. The Beneficiary and their partner did the Deceased's laundry and the Beneficiary cut the Deceased's hair when needed. • Commonwealth Bank (CBA) Smart Access bank statement in the name of the Beneficiary, for the period 1 September 20XX to 28 February 20XX (Account number ending in XXXX) • A certified copy of the Beneficiary's driver's licence
• A certified copy of the last will and testament of the Deceased, including Grant of Probate issued 24 January 2025, confirming XX XX 20XX as the Date of Death • 'PAYG payment summary - superannuation lump sum' for the year ended 30 June 20XX, providing details of the superannuation payment of XX XX 20XX to the Deceased's LPR In support of the application, the following documents were provided on XX XX 20XX: • CBA Smart Access bank statements in the name of the Beneficiary (Account number ending in XXXX) for the following periods: i 1 September 20XX to 28 February 20XX ii 1 March 20XX to 31 August 20XX iii 1 September 20XX to 29 February 20XX iv 1 March 20XX to 31 August 20XX v 1 September 20XX to 28 February 20XX • CBA Smart Access bank statements in the name of the Deceased (Account number ending in 5786) for the following periods: i 1 July 20XX to 31 December 20XX ii 1 January 20XX to 30 June 20XX iii 1 July 20XX to 31 December 20XX iv 1 January 20XX to 30 June 20XX
v 1 July 20XX to 31 December 20XX • Patient Health Summary for the Deceased, unsigned and undated, on the letterhead of XXXXXXXX, providing a list of current medications, and referencing 'depression' in 20XX, and 'anxiety' (XX XX 20XX) under the heading 'Active Past History'. In support of the application, the following documents were provided on XX XX 20XX: • CBA Complete Access bank statements in the name of the Beneficiary (Account number ending in XXXX) for the following periods: i 1 September 20XX to 28 February 20XX ii 1 March 20XX to 31 August 20XX iii 1 September 20XX to 29 February 20XX iv 1 March 20XX to 31 August 20XX v 1 September 20XX to 28 February 20XX • A letter from the Deceased's former General Practitioner (GP) dated XX XX 20XX, stating that the Deceased attended their clinic for management of 'mental-health-related concerns'. The letter does not provide a timeframe, but states that formal assessments indicated symptoms 'consistent with anxiety and depression'.
ATO-held information shows that the Deceased lived at XXXXXXXXXX from XX XX 20XX. ATO-held information shows that the Beneficiary lived at XXXXXXXXXXX from August 20XX to September 20XX, and again from July 2XX1 to the current date.
: Income Tax Assessment Act 1997 Section 302-60 Income Tax Assessment Act 1997 Section 302-145 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
: Meaning of death benefits dependant Division 302 of the ITAA 1997 sets out the taxation arrangements that apply to the payment of superannuation death benefits. These arrangements depend on whether the person that receives the superannuation death benefit is a dependant of the deceased and whether the amount is paid as a lump sum superannuation death benefit or a superannuation income stream death benefit. A superannuation death benefit is defined in section 307-5 of the ITAA 1997 as: A payment to you from a superannuation fund, after another person's death, because the other person was a fund member. A superannuation lump sum is described in section 307-65 of the ITAA 1997 as a superannuation benefit that is not a superannuation income stream, as defined in section 307-70 of the ITAA 1997. The taxable component of a superannuation death benefit paid as a lump sum to a non-dependant beneficiary is assessable income and is taxed under section 302-145 of the ITAA 1997.
Where a person who was a dependant of the deceased receives a superannuation death benefit paid as a lump sum, the death benefit is not assessable income and is not exempt income, under section 302-60 of the ITAA 1997. 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. As the Beneficiary is the adult child of the Deceased, paragraphs 302-195(1)(a) and (b) of the ITAA 1997 are not applicable.
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. The Beneficiary was not financially dependent on the Deceased person and therefore, paragraph 302-195(1)(d) of the ITAA 1997 is not applicable. 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 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. 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. 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. 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 care and support of children
e. the reputation and public aspects of the relationship f. the degree of emotional support g. the extent to which the relationship is one of mere convenience h. any evidence that the parties intend the relationship to be permanent; and i. 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. 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. Section 302-200.02 of the ITAR 2021 sets out the circumstances in which two people have an interdependency relationship. 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. 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 jail; or ii.one (or both) of them suffers from a disability. 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. 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 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. 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. 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). The above indicators are not an exclusive list and none of them are required for a close personal relationship to exist. 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 The Explanatory Statement to the Income Tax Amendment Regulations 2005 (No. 7) stated that: a. Generally speaking, it is not expected that children will be in an interdependency relationship with their parents.
While this statement does not preclude a child from being in an interdependency relationship with a parent, it suggests that interdependency only exists where the relationship goes beyond the usual relationship between an adult child and a parent. A close personal relationship as specified in subsection 302-200(1) of the ITAA 1997 would not normally exist between a parent and an adult child because there would not be a mutual commitment to a shared life between the two. In addition, the relationship between parents and their adult children would be expected to change significantly over time. It would be expected that the adult child would eventually move out and secure independence from their parents. However, where unusual and exceptional circumstances exist, a relationship between a parent and an adult child may be treated as an interdependency relationship for the purposes of subsection 302-200(1) of the ITAA 1997. In support of the ruling application, the Beneficiary provided a number of statements to illustrate the nature of the relationship between them and the Deceased, including:
a. The Deceased had a history of depression and anxiety and was medicated for depression. b. After their parents' separation, the Beneficiary (XX or XX years old), chose to primarily live with the Deceased as their parent was struggling with the separation and being alone. c. While the Beneficiary did not continually live with the Deceased from this time onwards, they did so permanently from November 20XX. d. The Deceased was not motivated to maintain the home or do housework and lived a hermit-like existence. They worked but did not participate in other social activities. They would occasionally walk by themself but otherwise would not leave the house except for appointments. It is accepted that the Beneficiary had a close relationship with the Deceased. However, the above statements do not indicate that the relationship between the Beneficiary and the Deceased was over and above a normal family relationship between a parent and an adult child.
The fact that the Beneficiary and the Deceased lived together for a period of time, and were living together at the time of the Deceased's passing, does not mean they had a mutual commitment to a shared life. It is instructive that the Beneficiary had previously moved out of the Deceased's home, on two occasions. The evidence does not show that the Beneficiary and the Deceased shared a 'close personal relationship'. As a close personal relationship did not exist between the Beneficiary and the Deceased, the first requirement specified in paragraph 302-200(1)(a) of the ITAA 1997 has not been satisfied in this case. Living together 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.
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. ATO-held data (referenced above under 'Relevant facts and circumstances') shows that both the Beneficiary and the Deceased resided at XXXXXXXXX, being the home of the Deceased. While that data shows the Beneficiary resided at that address from July 20XX, they have stated that they in fact returned to live at the Deceased's home only in November 20XX. The Grant of Probate confirms the above as the last residential address of the Deceased, while bank statements provided for the Deceased (for the period 1 July 20XX to 31 December 20XX) provide this as the Deceased's address.
The certified copy of the Beneficiary's driver's licence shows this address, as do provided bank statements for the Beneficiary for the period 1 September 20XX to 28 February 20XX. The Grant of Probate also refers to the above address as that of the Beneficiary. The requirement specified in paragraph 302-200(1)(b) of the ITAA 1997 has been satisfied in this case. Financial support 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. 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. Bank statements provided for the Deceased for the period 1 July 20XX to 31 December 20XX show the Deceased made mortgage payments, and paid regular expenses such as rates, house insurance, power, internet and utilities (water).
The Beneficiary's statements show regular transfers for rent. The amounts and timing of the payments vary. The first such payment is for only $XX on XX XX 20XX. Regular payments of $XX continued on a weekly basis until XX XX 20XX. From this time onwards, the majority of the transfers were for $XXX, generally occurring approximately weekly. The last rent transfer occurred on XX XX 20XX, being just over one month before the Date of Death. After this date, there were other transfers with the notation 'Bill'. The last such transfer occurred on XX XX 20XX. It is not considered that the Beneficiary was financially dependent on the Deceased, as they had sufficient income from employment to support himself. However, the test here is one of financial support, not dependency. It is considered that the Beneficiary and the Deceased provided each other with a level of financial support during the period in which they lived together: the Deceased paid for the majority of household expenses, and the Beneficiary contributed towards expenses by paying regular rent, and making occasional transfers towards bills. Consequently, paragraph 302-200(1)(c) of the ITAA 1997 has been satisfied.
Domestic support and personal care 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. The Beneficiary has provided statements in relation to this requirement, advising that they provided the following domestic support for the Deceased: • doing laundry and maintaining the upkeep of the house • chopping and stacking firewood • preparing meals • maintaining the lawns The Beneficiary has also advised that they provided the Deceased with emotional support and comfort.
In respect of personal care, the Beneficiary has advised that they cut the Deceased's hair when required. The Beneficiary has provided a copy of a Patient Health Summary for the Deceased, referencing a history of depression and anxiety, as well as a letter from the Deceased's former GP, dated XX XX 20XX, which confirms they had been receiving medical care and support for these conditions. It is accepted that the Beneficiary provided a level of domestic support and personal care for the Deceased. 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 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.