The facts of the PBR (1052529436019) showed that the beneficiary was the adult child of the deceased whose superannuation fund paid a death benefit payment to the deceased’s estate, including a taxable component of which no tax was withheld.
As well as a death certificate, and bank statements showing deposits into the beneficiary’s account, the ATO was also provided with an excerpt from a bank statement, with the letterhead “Statutory Trust Account – Solicitors”, showing a credit of hundreds of thousands of dollars. The excerpt showed no account name or number. No corresponding bank statement was provided for cross-referencing purposes to show the account from which the transfer came.
Additionally, a copy of a Trust Account Receipt addressed to the beneficiary was also submitted. The solicitor advised that the amounts on the receipt represented “the purchase monies, cost and outlays deposited into our trust account to the account of (the beneficiary) when this office acted for them as the buyer in the conveyancing of that purchase”.
The executor’s statutory declaration showed that there was a considerable amount of money that was transferred out of the deceased’s bank accounts to the beneficiary over a considerable period of time, which reflected the beneficiary’s financial dependence on the deceased.
The beneficiary’s statutory declaration showed that the deceased contributed hundreds of thousands of dollars for the purchase of the beneficiary’s home, as well as additional costs associated with the purchase. The beneficiary stated that they were under no obligation to repay the money, and it was given to them as a gift.
The deceased also purchased two cars for the beneficiary and assisted the beneficiary on a regular basis over the course of at least four years, purchasing groceries which cost hundreds of dollars per week.
It also stated that although the beneficiary worked part-time for approximately two years, they were dependent upon the contributions of the deceased.
In its ruling, the ATO stated that as the beneficiary and the deceased did not live together, as is required by paragraph 302-200(1)(b) of the ITAA 1997 (and there is no information to suggest that the reason they did not live together is that either or both of them suffered from a physical, intellectual or psychiatric disability, as required by paragraph 302-200(2)(c) of the ITAA 1997), the requirements of paragraph 302-195(c) of the ITAA 1997 (interdependency relationship) cannot be satisfied.
Therefore, it is necessary to consider paragraph 302-195(1)(d) of the ITAA 1997 – whether the beneficiary “was a dependent of the deceased person just before he or she died”.
“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 ruling said.
“The principle underlying these authorities is that it is the actual fact of dependence or reliance on the earnings of another for support that is the test. This was also reflected in Edwards v Postsuper Pty Ltd [2007] FCAFC 83 where the Full Court of the Federal Court agreed with the Tribunal that while the deceased provided many gifts to their family, it did not consider that would make the appellants and their family financially dependent on the deceased.”
The ruling continued that the relevant financial support is that required to maintain the person’s normal standard of living and the question of fact to be answered is whether the alleged dependant was reliant on the regular continuous contribution of the other person to maintain that standard.
The ruling said there was not sufficient evidence provided to confirm the amount of funds provided to the deceased was provided to the beneficiary by the deceased as the bank statement excerpt contained no account number, or other identifying information and no corresponding bank statement was provided to show the source of the transfer to the account
Additionally, the ruling said that even if there was sufficient evidence to verify the money was provided by the deceased to the beneficiary, the date was more than three years prior to the date of death.
“It is considered that the period of time which had elapsed between the purported financial support, and the date of death, is too great for the above amount to be considered when establishing whether financial dependence existed in this case,” the ruling said.
The ruling also noted that bank statements showing transfers directly to the beneficiary also showed further transfers after the date of death and these transfers cannot be considered for the purposes of determining whether the beneficiary was financially dependent on the deceased, as paragraph 302-195(1)(d) of ITAA 1997 refers to “any other person who was a dependant of the deceased person just before he or she died”.
In regard to payments for groceries, the ruling said that again, it was not possible to confirm how much of this amount, if any, was for the benefit of the beneficiary.
“Insufficient documentation has been provided to verify the claimed level of support provided to the beneficiary by the deceased. While it is accepted that the deceased provided some level of financial support to the beneficiary, the verified amount of that support is not of a level of support which would constitute financial dependency,” the ruling said.
“The evidence provided does not show that the beneficiary was dependant on the deceased for the payment of their ordinary living expenses. Based on the evidence provided, the Commissioner is not satisfied that the beneficiary was a person who was substantially reliant on regular and continuous financial support from the deceased for their ordinary living expenses.”
