: 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 commences on: 1 July 2024
: The Beneficiary is the parent of the Deceased. The Deceased died on XX XXX 20XX (Date of Death) The Beneficiary was born XX XXX 19XX and was therefore older than 18 years when the Deceased died. On XX XXX 20XX the trustee of the deceased estate received a death benefit payment of $XXX,XXX from the Deceased's superannuation fund, XXXXXX. No tax was withheld from this payment. On XX XXX 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 prior to his death. On XX XXX 20XX, the following documents were provided in support of the application: • PAYG payment summary - superannuation lump sum with date of payment XX XXX 20XX. • Centrelink Carer Payment and/or Carer Allowance Medical Report (SA332a), dated XX XXX 20XX, and completed by the Deceased's treating GP that confirmed the following: o the Deceased had been diagnosed with XX (XX) o the Deceased was bed bound from XX o the Deceased was immobile and dependent on daily physical care for all personal needs. • Your response
ATO Private Info Required_XXX XXXX confirming the following: o the Deceased died interstate. o Around 20XX, the Beneficiary moved into the Deceased's home to care for the Deceased. The Beneficiary lived at the Deceased's home until the Deceased's passing on XX XXX 20XX. The Beneficiary continued to live at the Deceased's home until it was sold XX XXX 20XX. o In XXX 20XX the Deceased received an income protection insurance payout. o In XXX 20XX the Deceased received a TPD insurance payout. o The Beneficiary paid for food and some household bills prior to the Deceased's insurance payments. The Beneficiary continued to pay for all food and the Deceased paid all household bills. o The Deceased provided free accommodation to the Beneficiary. o The Beneficiary did all of the housework. o The Beneficiary provided most of the daily physical care required by the Deceased. o The Beneficiary and the Deceased provided emotional support to each other. On XX XXX 20XX, the following documents were provided in support of the application: • the Deceased's death certificate.
• The Beneficiary's application for Centrelink Carer payment dated XX XXX 20XX. • bank statements in the name of the Beneficiary (Account number ending in XXXX) with the date range XX XXX 20XX to XX XXX 20XX. • bank statements in the name of the Beneficiary (Account number ending in XXXX) with the date range XX XXX 20XX to XX XXX 20XX. • xx statement in the name of the Beneficiary (Account number ending in XXXX) for the date range XX XXX 20XX to XX XXX 20XX. • xx & Consent Form in the name of the Beneficiary (Account number ending in XXXX) for the date range XX XXX 20XX to XX XXX 20XX. • Centrelink Statement for Carer Payment for the period XX XXX 20XX to XX XXX 20XX issued to the Beneficiary on XX XXX 20XX. • bank statements in the name of the Deceased (Account number ending in XXXX) with the date range XX XXX 20XX to XX XXX 20XX. • bank statements in the name of the Deceased (Account number ending in XXXX) with the date range XX XXX 20XX to XX XXX 20XX.
• bank statements in the name of the Deceased (Account number ending in XXXX) with the date range XX XXX 20XX to XX XXX 20XX. • Your email to us confirming: o that the Beneficiary was providing the same level of personal care to the Deceased at the time of his death as outlined in the Centrelink Carer Payment and/or Carer Allowance Medical Report dated XX XXX 20XX. o That the Beneficiary was unable to obtain the Deceased's bank statements for XXX to XXX 20XX as the account has since been closed. o That the [relevant] documents provided confirm that the Beneficiary was residing at the Deceased's home. ATO-held information shows that the Deceased lived at XX XXX since 20XX.
: 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 • the deceased person's spouse or former spouse; or • the deceased person's child, aged less than 18; or • any other person with whom the deceased person had an interdependency relationship under section 302-200 just before he or she died; or • any other person who was a dependant of the deceased person just before he or she died. As the Beneficiary is the parent 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: • they have a close personal relationship; and • they live together; and • one or each of them provides the other with financial support; and • 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: • they have a close personal relationship; and • they do not satisfy one or more of the requirements of an interdependency relationship mentioned in paragraphs (1)(b), (c) and (d); and • 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):: • the duration of the relationship • the ownership, use and acquisition of property
• the degree of mutual commitment to a shared life • the care and support of children • the reputation and public aspects of the relationship • the degree of emotional support • the extent to which the relationship is one of mere convenience • any evidence that the parties intend the relationship to be permanent; and • 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:
• they satisfy the requirements of paragraphs 302-200(1)(a) to (c) of the ITAA 1997; and • 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: • they have a close personal relationship; and • they do not satisfy one or more of the other requirements set out in subsection 302-200(1) of the ITAA 1997 because: o they are temporarily living apart, for example because one of them is temporarily working overseas or in jail; or o 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:
• under an employment contract or a contract for services; or • 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 close personal relationship will be one that involves a demonstrated and ongoing commitment to the emotional support and well-being of the two parties. • Indicators of a close personal relationship may include: o the duration of the relationship; o the degree of mutual commitment to a shared life; o 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: • 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:
• Around 20XX the Beneficiary moved into the Deceased's home to care for them. The Deceased had been diagnosed with xx. The Beneficiary continued to live with the Deceased until their passing. • The Beneficiary provided daily care for the Deceased who was immobile and dependent on assistance for personal hygiene and grooming and assistance with eating. The Beneficiary provided this daily care up until the Deceased's passing. • The Beneficiary did 100% of the house work while they lived with the Deceased. • The Beneficiary received Centrelink carer payment in the 20XX-XX income year. • The Beneficiary and the Deceased provided emotional support to each other. 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 the Beneficiary and the Deceased lived together for a period of time and were living together at the time of the Deceased's passing, and that the Beneficiary provided daily personal care to the Deceased does not mean that they had a mutual commitment to a shared life. In this case, the Beneficiary moved into the Deceased's home in order to provide personal care for him. 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 and documents provided (referenced above under 'Relevant facts and circumstances') shows that both the Beneficiary and the Deceased resided at XX XXX XXX, being the home of the Deceased. ATO-held data confirms the Deceased's home as the last residential address of the Deceased, while the Deceased's death certificate provide this as the Deceased's address at the time of his passing. Bank statements provided for the Beneficiary (for the period XX XXX 20XX to XX XXX 20XX) show the Deceased's home as the Beneficiary's address. 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 XX XXX 20XX to XX XXX 20XX show the Deceased made mortgage payments, and paid household expenses such as rates, power, internet and utilities (water). The Deceased also made several cash transfers to the Beneficiary. Bank statements provided for the Beneficiary's for the period XX XXX 20XX to XX XXX 20XX show weekly purchases of groceries. It is not considered that the Deceased or the Beneficiary were financially dependent on the other as they both had sufficient income from pensions to support themselves.
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 for groceries. 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: • 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 documents and statements in relation to this requirement, advising they provided the following domestic support for the Deceased: • Assistance with personal hygiene including emptying of urine bag from permanent catheter and assisting with toileting. • Assistance with personal grooming including cleaning teeth, doing hair, shaving, bathing. • Assistance with cutting up food prior to eating. • Assistance with dressing. • All housework. The Beneficiary has also advised that they and the Deceased provided each other with emotional support and comfort. The Beneficiary has provided a copy of a Centrelink Carer Payment and/or Carer Allowance Medical Report (SA332a), dated XX XXX 20XX, and completed by the Deceased's treating GP that confirmed the following: • the Deceased had been diagnosed with xx • the Deceased was bed bound from xx • the Deceased was immobile and dependent on daily physical care for all personal needs.
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.