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Super and estate planning

Who is a dependant?

Section: 14.8

There are some differences in the definition of a dependant for SIS and tax purposes as shown in the table below.

The SIS definition determines who can receive a super death benefit. The tax definition determines how a super death benefit will be taxed (ie as a dependant or non-dependant).

Dependant SIS Tax
Spouse (married, de facto, or same-sex) Yes Yes
Former spouse No Yes
Child under age 18 Yes Yes
Child aged 18 or over Yes No
Financial dependant (including dependent adult child) Yes (full or partial) Yes (full)
Interdependent relationship Yes Yes
Individual who receives a superannuation lump sum because of the death of another person if the deceased person died in the line of duty as; a member of the Defence Force, Australian Federal Police, the police force of a State or Territory; or a protective services officer No Yes

A spouse is a dependant regardless of whether the spouse was financially dependent on the member. A spouse includes the person at death to whom the member was married or with whom the member was in a de facto relationship or in a relationship that is registered under a law of a State or Territory (whether of the same sex or a different sex).

Former spouses are dependants for tax purposes but not for SIS.

This includes any person, regardless of age, who at the member's death was the member's natural, step, adopted, ex-nuptial or current spouse's child, including a child who was born through artificial conception procedures or under surrogacy arrangements with the member's current or then spouse.

A child for tax purposes does not include children age 18 or over.

Financial dependant
For both SIS and tax purposes, a dependant includes any person who was financially dependent on the member at the time of the member's death. However, the degree of financial dependency required varies for SIS and tax purposes.

From a SIS perspective, the Superannuation Complaints Tribunal (SCT) has clarified that a potential beneficiary can qualify as a financial dependant if they were receiving financial support from the deceased member at the time of death. The SCT also confirmed that there is no requirement for the beneficiary to be fully dependent on that financial support, or for the beneficiary to need the financial support that was being provided by the deceased.

In contrast, for tax purposes the Australian Taxation Office has taken the view in a number of private rulings that a potential beneficiary would be a financial dependant if they were unable to meet their basic daily necessities (eg, shelter, food, clothing etc) without the financial support which was being provided by the deceased member at the time of death. In its view, financial support that merely supplements a beneficiary's income and improves their quality of life would not qualify the beneficiary as a financial dependant.

However, it is therefore possible that some partially dependent beneficiaries may be a dependant for SIS purposes, while failing to qualify for a tax-free death benefit for tax purposes.

Interdependency relationships
A dependant includes a person who was in an interdependency relationship with the deceased member at the time of death. An interdependency relationship between two people is characterised by:

  • a close personal relationship
  • living together
  • financial support
  • domestic support
  • personal care of a type and quality above the care and support that might be provided by a mere friend or flatmate.

An interdependency relationship may include a partner who does not meet the definition of a spouse. An interdependency relationship may also exist where there is a close personal relationship between two people but they do not live together; where they provide financial support, domestic support or personal care due to one or both of them having a physical, intellectual or psychiatric disability, or they are temporarily living apart due to one (or both of them) temporarily working overseas or serving a gaol sentence.

Examples include same sex couples, an adult child residing with and caring for an elderly parent and sisters residing together.

In establishing whether such a relationship exists, all of the circumstances of the relationship are taken into account, including (where relevant):

  • the duration of the relationship
  • whether or not a sexual relationship exists
  • 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 (such as whether the relationship is publicly acknowledged)
  • the degree of emotional support
  • the extent to which the relationship is one of mere convenience, and
  • any evidence suggesting that the parties intend the relationship to be permanent
  • 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.

Last modified: Tuesday, May 2, 2017