The Australian Taxation Office has confirmed in ATOID 2014/22 that an adult child can be a death benefits dependant under the superannuation laws. In the particular facts of the ATOID, the adult child had given up work to care for a terminally ill parent and received no financial support from anyone, other than the parent, during that time. The child was found to be both financially dependent on, and an interdependent of, the child’s mother. Consequently, any death benefits paid to the adult child would be tax free.
This is an important reminder that just because a child is aged 18+, it does not mean they are automatically a non-death benefits dependant. It is also important to ensure that any superannuation succession plans consider the nature of the relationship between parents and their adult children, and whether a relationship of financial dependency exists.
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