The case concerns whether a parent, who cared for their terminally ill child both financially and domestically, could be considered to be in an interdependency relationship regarding death benefits.
The facts of the case (1052235049428) include that the beneficiary is the parent of the deceased who had been previously married and had children, who were all minors at the time of the beneficiary’s passing.
Following the breakdown of the marriage, the deceased moved into an apartment and subsequently moved in with the beneficiary and was soon after diagnosed with a terminal illness, as well as having cognitive issues which forced them to cease working.
The deceased resided with the beneficiary until they were admitted to hospital and then transferred into palliative care before their death.
The beneficiary did not receive a carer’s allowance for the deceased and had also taken out a loan to help pay the deceased’s debts.
In a statement to the tribunal, the beneficiary stated that both parties provided each other emotional support and companionship during periods of illness and when guidance and support to deal with family matters was required.
The deceased received a payout while in the beneficiary’s care which was used to repay the beneficiary.
In the statement, the beneficiary said they assisted the deceased by providing domestic support, including accompanying the deceased to hospital appointments for support, paying for an Uber to transport the deceased home if unable to attend appointments, personal care and assistance, including assisting with getting in and out of bed, assisting with pain management, assisting when the deceased would fall out of bed.
Financially, the beneficiary paid off the deceased’s debts, including credit card and personal loans, medical expenses, food, utilities, clothing, transport expenses, motor vehicle expenses including insurance, and grooming expenses.
The beneficiary provided documentation of the relationship which included bank statements showing the deceased’s accounts in arrears, customer receipts, payments they made to the deceased’s personal bank account, as well as a statutory declaration from the beneficiary that stated the catalyst for them moving in with the beneficiary was due to financial stress.
It also stated the beneficiary was not financially dependent on the deceased as the beneficiary received sufficient financial support from Centrelink benefits from the aged pension, but that the deceased was financially dependent on the beneficiary.
The tribunal stated that an interdependency relationship as defined under section 302-200 of the Income Tax Assessment Act 1997 did not exist between the deceased and the beneficiary, as all of the requirements set out in the legislation were not satisfied in this case.
As such, the beneficiary is not a death benefits dependant of the deceased and consequently, the taxable component of the superannuation lump sum death benefit paid to the beneficiary is assessable income.
The ruling stated that 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,” it stated.
“The beneficiary was not financially dependent on the deceased person and therefore, paragraph 302-195(1)(d) of the ITAA 1997 is not applicable.”
The ruling also stated that the relationship between the deceased and beneficiary did not satisfy the requirement of a close personal relationship as it was not over and beyond “a normal family relationship between a parent and an adult child”.
“It was not the case that the deceased had always lived with the beneficiary and intended to always do so. While both parties lived together for a long period of time, the deceased had lived apart from the beneficiary for a reasonable part of their life which is evidenced by correspondence provided showing different addresses for the deceased,” the ruling stated.
“While financial support was provided, it is not considered unusual between a parent and an adult child. Therefore, a close personal relationship did not exist between the beneficiary and the deceased and the first requirement specified in paragraph 302-200(1)(a) of the ITAA 1997 has not been satisfied in this case.”
I have not read this Case, so that is critical.
However, it would seem to imply that had the Carer been a “friend” instead of a parent who cared for the super member, paid his bills, provided food and medical and mental support, fed and bathed the member, administered medicine, then the result may have been dirrerent especially if the Carer had registered as a “Carer”.