The facts of the case are that the beneficiary was the parent of the deceased, who received a death benefit payment from the deceased’s superannuation fund following their passing from a terminal illness.

The beneficiary provided to the court documents that stated the deceased began living with the beneficiary due to loss of employment and struggles with substance abuse issues.

The beneficiary and deceased negotiated an amount for weekly rent and board, and the beneficiary often provided extra money to the deceased.

After the deceased was diagnosed with a terminal illness, the beneficiary became their carer, which required significant support, including accompanying the deceased to medical appointments and treatments, assisting in showering, food intake and management of medications, superannuation fund exit statement, and letters of administration granted to the beneficiary.

The beneficiary also supplied documentation that showed they cared for the deceased by providing domestic support, personal care and assistance, and emotional support.

The tribunal denied the claim for interdependency based on failing to meet the four criteria needed to establish the relationship as set out in subsection 302-200(1) of the Income Tax Assessment Act 1997 (ITAA 1997).

This subsection defines interdependency relationship as that which exists between two persons (whether or not related by family) if:

1. They have a close personal relationship.
2. They live together.
3. One or each of them provides the other with financial support.
4. One or each of them provides the other with domestic support and personal care.

Additionally, subsection 302-200.02(2) of the ITAR 2021 provides that an interdependency relationship exists between two people where:

1. They satisfy the requirements of paragraphs 302-200(1)(a) to (c) of the ITAA 1997.
2. 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.

In this case, the tribunal found that the deceased and beneficiary met only three of the four criteria to qualify as in an interdependency relationship.

The first criteria met was that of living together, and documentation provided, in the form of a driver’s licence, showed the deceased residing at the same residence as the beneficiary as date of death.

The ruling stated that, consequently, the requirement specified in paragraph 302-200(1)(b) of the ITAA 1997 had been satisfied.

Secondly, in relation to the criteria of financial support, the ruling stated this was also met with the beneficiary providing a level of financial support in the way of reduced board payments and giving the deceased extra money.

The third requirement met was domestic support and personal care, and the tribunal accepted statements that showed the beneficiary provided the deceased with some level of domestic support and personal care, including attending and accompanying them to medical appointments and treatments, assistance with showering, food intake and medication management.

In addition, the beneficiary provided the deceased with significant emotional support and comfort.

However, it was the requirement of a close personal relationship that failed to meet the standards set out by paragraph 302-200(1)(a) of the ITAA 1997, which states that the two persons must have a commitment to a shared life.

The ruling 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.

“It was not the case that the deceased had always lived with the beneficiary and intended to do so,” it said.

“While both parties lived together for a long period of time, the deceased had lived apart from the beneficiary for a reasonable part of his life, which is confirmed by a personal statement from the beneficiary that the deceased moved back home in 2018.”

It continued that there was no evidence to support that the beneficiary and the deceased had a mutual commitment to share a 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 said.

“Consequently, the taxable component of the superannuation lump sum received is assessable income and is subject to income tax under section 302-145 of the ITAA 1997.”