In a recent private binding ruling (1052395100997) the commissioner found the beneficiary applicant was not in an interdependent relationship nor qualified as a death benefit dependent because they did not have a close personal relationship nor commitment to a shared life prior to the deceased’s passing.
The facts of the case are that during a period of chronic illness and subsequent treatment the beneficiary was dependant upon his parents for care and financial assistance due to being unable to work on medical grounds.
The beneficiary stated that he was given financial support by his parents (the deceased and husband), during the time of undergoing treatment in which he moved in with his parents.
The facts continued that the parents cared for the beneficiary during and after treatment, providing financial support as well as renting a unit close to the hospital so he could attend daily treatments to which they drove him.
They also helped the beneficiary by providing food and medication and he continued to live sporadically at his parents’ residence throughout his treatment. He was declared unable to work again and was living with the deceased at the time of her death.
The beneficiary provided evidence to the court including extensive bank statements showing payments from the deceased into his account. He also provided correspondence that stated he and his now deceased partner were the only dependants of the deceased in the superannuation fund to whom the trustee could pay the deceased’s superannuation death benefit.
In her last will, the deceased left her estate to the beneficiary and the partner in equal shares. The trustee of the trust resolved to exercise discretion to pay the whole amount of the deceased’s superannuation death benefit to the beneficiary.
In its ruling the court stated that the relationship between the beneficiary and the deceased was not over and above a normal family relationship between a parent and an adult child.
“No evidence has been provided to suggest a mutual commitment to a shared life existed between the beneficiary and the deceased. It was not the case that the beneficiary had always lived with the deceased and intended to always do so,” the ruling stated.
“While the parties had lived together for a short period of time at the time of the deceased’s passing, the beneficiary had previously moved out of the family home. Furthermore, according to statements made by the beneficiary and a third party, he moved back in with the deceased due to [health reasons].”
It continued that the matters that indicate the beneficiary and the deceased did not have a close personal relationship before the deceased’s death are:
- The deceased provided significant support to the beneficiary, regardless of whether they were living together or separately. The deceased provided the beneficiary with ongoing domestic and financial support. This level of care did not exceed the care and comfort that would usually be provided by a parent to an adult child. They did not have an exceptionally close relationship that goes above and beyond that of a normal parent and child relationship.
- Due to his disability, the beneficiary continued to be significantly dependant on the deceased for ongoing care and support, for the remainder of the deceased’s life. They would not have continued to live together if the beneficiary did not receive the disability. They did not have a strong mutual commitment to having a shared life.
“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,” it stated.
The ruling continued that the beneficiary also had sufficient income to support himself financially and was not financially dependent on the deceased to pay for utilities and everyday living expenses.
“However, ‘financial support’ does not equate with financial dependence. The level of financial support required does not have to be substantial,” the ruling stated.
“The provided [evidence] also shows that the deceased made intermittent transfers to the beneficiary and also provided free accommodation and food … therefore, the deceased provided the beneficiary with financial support during the final years of the deceased’s life due to the beneficiary’s disability and subsequently being unable to work. Consequently, paragraph 302-200(1)(c) of the ITAA 1997 has been satisfied.”
In regard to the financial support the court ruled that “for a relationship of dependency to be established, there must be more than the mere giving of money. Rather there must be a relationship where one party relies on the other for what is required for their ordinary living”.
“The tenor of the case law . . . refers to a level of dependency to maintain the dependant’s ordinary living (Griffiths v Westernhagen), normal standards of living (Malek’s case) and relying on another as a means of subsistence (Kauri Timber Co (Tas) Pty Ltd),” it stated.
“As no further documents have been submitted to support financial dependency, section 302-195(d) has not been satisfied.”
“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.”
