Who gets the Super at Death? This makes for an interesting read.
DECISION AND REASONS FOR DECISION  AATA 8
ADMINISTRATIVE APPEALS TRIBUNAL
) No WT1999/73 & 74
Taxation Appeals DIVISION
Deputy Commissioner of Taxation
R D Fayle, Senior Member
13 January 2000
Pursuant to s43 of the Administrative Appeals Tribunal Act 1975, the objection
decisions under review are affirmed.
...........(Sgd) R D
Income tax – Eligible termination payment – Parents beneficiary of son’s estate
– Whether parents dependent on son at time of death or when ETP made – Meaning of
dependant – Income Tax Assessment Act 1936, sec 27A, 27AAA(4)
Commissioner for Superannuation v Scott (1987) 71 ALR 408
REASONS FOR DECISION
13 January 2000R
D Fayle, Senior Member
1. Both applicants requested that this matter be heard in private. The Tribunal
is satisfied that by reason of the sensitive nature of the evidence that the identity
of the applicants be confidential. Therefore, pursuant to s35 of the
Appeals Tribunal Act 1975 the Tribunal directs that the matter be heard
in private and that the disclosure of the identity of the applicants be restricted.
2. The applicant’s son died in a motor vehicle accident on 26 July 1993.
The proceeds of his superannuation fund were paid equally to his parents (“the applicants”)
during the year of income ended 30 June 1995. The Deputy Commissioner of Taxation
(“the respondent”) assessed the applicants on their respective share of the proceeds
of the superannuation fund on the basis that it was an eligible termination payment
(“ETP”) and not exempt because neither applicant was dependant
on the deceased at the time of his death or at the time of the payment of the death
benefit. The applicants have objected to that decision which is the matter
for review by this Tribunal.
3. The applicants attended the hearing in the company of their daughter
who assisted. All three gave evidence. Mr Irwin McAleese, an officer
of the Australian Taxation Office, represented the respondent. Documents filed
with the Tribunal pursuant to s37 of the Administrative Appeals Tribunal Act
1975 were in evidence. The applicants also provided a prepared statement of
evidence (Exhibit A1) and three relevant income tax returns (Exhibits A2, A3 and
4. The issue is whether either or both of the applicants were “dependant”, as that
term is defined in s27A (1), either at the time of the deceased’s death or at the
time of payment of the death benefit. If so, since the amounts paid are not
“excessive” then they would be excluded from assessment as an ETP by operation of
5. It was not in dispute that the respective amount received by each applicant from
the proceeds of the deceased’s superannuation policy was an ETP
6. The applicants and their son and daughter were a close family. They helped
each other when able and the need arose. The applicant’s (“husband” and ”wife”)
and their daughter and her husband purchased a 7-day continental delicatessen shop
in 1989. At the time the husband was active in his cabinet-making business
and the wife conducted a linen shop business. It was therefore agreed that their
son would assist in the delicatessen although both applicant’s worked there once
their other daily duties had finished and on week-ends. The delicatessen was
very much a family affair. However, when the husband retired from his cabinet-making
business he began full-time work in the delicatessen, replacing his son who had
been paid about $250 per week. Nevertheless, the applicants continued to lend
financial support to their son who was unemployed.
7. When the son was married, his father spent considerable time and effort refurbishing
his home unit owned by their son, where the young couple lived. When first
married their son was studying part-time and working in the family business as mentioned.
The applicant’s assisted with his mortgage repayments. However, the marriage did
not last and their son moved back home leaving the unit vacant whilst he decided
whether to sell. He then began full-time work with a bread manufacturer as
a delivery driver whilst continuing to study part-time. He also assisted with
the family business by relieving his parents at weekends.
8. The applicants said that they relied on the family assistance in the business,
which was not doing very well and it could not afford to pay the wages otherwise
necessary. Both their son and daughter worked in the business, without remuneration.
The applicants maintained that without that help the business would not have survived
and to that extent they were dependent on both children. Indeed, their evidence
was that after their son’s tragic death they were not able to carry on the business
profitably and it was sold in 1995.
9. The income tax return for the husband for the year ended 30 June 1994 (Ex. A2)
shows his assessable income to comprise $27,342 from his cabinet making job and
only $485 from other sources. For the year ended 30 June 1995, the year in
question, his earnings from the cabinet-making job was $30,199 and income from other
sources (excluding the ETP in question) to be only $483 (T3). It would appear
that the wife did not file an income tax return for the 1993/94 year as her earnings
were below the threshold and for the 1994/95 year her assessable income was the
ETP in question only (T3). In the 1992/93 year each applicant returned $1,284
assessable income from the delicatessen business partnership (Ex. A3 & A4).
Whilst that was the only assessable income of the wife, the husband also derived
$6,494 from his cabinet-making job (A3).
10. The applicants contend that they were dependent on their son prior to his death.
This dependency arose because their son had provided valuable assistance to their
business for no reward, without which the business would not have survived. In support
they pointed to the fact that the trustees of the superannuation fund had paid the
proceeds to them on the grounds that they were satisfied that the applicant’s were
dependants of their deceased son.
11. Mr McAleese, for the respondent, submitted that the evidence shows that the
applicants did not depend on their son for financial assistance at any relevant
time, neither at the time of his untimely death nor at the time when the superannuation
payment was made. He further submitted that the respondent is not bound by
any decision of the trustees of the superannuation fund, which would be made in
accordance with the relevant trust deed.
The Discussion and Reasons
12. The definition of “dependant” for the present purposes is found in s27A(1) of
the Income Tax Assessment Act 1936 (“the Act”):
“dependant” in relation to a person:
person who is or was a spouse of the person; and
(ii) any child of
the person, being a child who has not attained the age of 18 years.
13. Clearly, the applicants must therefore satisfy the ordinary meaning of the word
“dependant” to qualify. The Macquarie Dictionary defines “dependant” as:
“1. one who depends on or looks to another for support, favour etc. 2. a person
to whom one contributes all or a major amount of necessary financial support.
14. The Act is primarily concerned with commercial and financial matters “…
An Act relating to the imposition, assessment and collection of tax upon incomes” . As such, a question of dependency should be construed
within that context. The relevant question, in this sense, is whether the
applicants were financially dependent on their son at the relevant time. In
Commissioner for Superannuation v Scott (1987) 71 ALR 408 the Full Federal
Court (Fisher, Spender and Pincus JJ) took the view that dependence may refer to
reliance on another for support, not only in fact but also in need (414).
15. In the present case there is no suggestion that the applicants were in any sense
financially dependent on the deceased. Indeed, the evidence is that for almost
all of his life the deceased relied in varying degrees upon the generosity of the
applicants for his financial support. The Tribunal understands that the dependence
asserted by the applicants is one of physical support helping out with the running
and management of the family business.
16. However, the evidence does not support a conclusion that either applicant relied
to any significant extent on the profits of the family delicatessen business for
their financial survival. In the years immediately preceding the death of
their son and the years following up to the time of the payment by the trustees
of the superannuation fund, the applicants’ financial support came primarily and
principally from the husband’s employment as a cabinet maker. The son’s participation
in the physical running of the family delicatessen business was customary for that
family and was not a factor which, of itself, contributed to the financial support
of the applicants.
17. For the reasons and pursuant to s43 (1)(a) of the Administrative Appeals Tribunal
Act 1975, the objection decisions under review are affirmed.
I certify that the 17 preceding paragraphs are a true copy of the reasons for the
decision herein of R D Fayle, Senior Member
Date/s of Hearing
7 December 1999
Date of Decision
Counsel for the Applicant
Solicitor for Applicant
Counsel for the Respondent
Mr I McAleese
Solicitor for the Respondent
Australian Taxation Office
 The amounts were assessed pursuant to s27B of the Income Tax
Assessment Act 1936.
 That is, as defined in s27A (1) “eligible termination payment”
paragraph (ba), being a payment made to each applicant from a superannuation fund
by reason that their son was a member of the fund and the payments were made to
the applicants after the death of their son.
 See the title of the Income Tax Assessment Act 1936.