The AAT has ordered the Commissioner to request a couple (the taxpayers) to make an application for another private ruling in relation to a life insurance payout received following the death of their son.
In 2013, the taxpayers’ son died in a motorbike accident. He was employed as a pilot and up to the time of death, had lived at home with his parents. As administrators of their son’s estate, the taxpayers received a lump sum payment of $500,000 under their son’s life insurance policy which was part of his employer’s super scheme. The taxpayers applied for a private ruling that the $500,000 was a superannuation lump sum that was not assessable under s302-60 of the ITAA 1997. The Commissioner issued a private ruling to each taxpayer ruling that they were not death benefit dependants. The Commissioner disallowed the taxpayers’ objection and they then sought review of the objection decisions.
The AAT said it was confined to a consideration of the “facts” in the “scheme” identified in the private ruling in reviewing the objection decision. The AAT also said it was necessary for each taxpayer to have an “interdependency relationship” under s302-200 immediately before their son’s death for each taxpayer to be a “death benefits dependant” under s302-195(1)(c). The AAT concluded the Commissioner’s private ruling was correct. It found the facts comprising the scheme did not satisfy the requirements of an interdependency relationship under subparas (a) and (d) of s 302-200(1)(a), which meant the requirements of a death benefit dependant under s 302-195(1)(c) were not met. The AAT further found that none of the facts in the scheme satisfied any of the matters in ITA regs 302-200.01(2).
The AAT noted “additional information” provided by the taxpayers, which asserted, among other things, a close personal relationship, and the provision of physical and emotional care, which were not found in the facts comprising the scheme. The AAT said the additional information was “materially different” from the scheme. It said that had the Commissioner been provided with the information before the objection decisions were made, the Commissioner would have requested the taxpayers to make an application for another private ruling under s 359-65(3)(a) of the TAA. The AAT concluded it was administratively more convenient to remit the matter to the Commissioner to request the taxpayers to make another application for a private ruling.
(Re TBCL & Anor and FCT [2016] AATA 264, AAT, Ref Nos: 2015/1690; 2015/1693, McDermott DP, 27 April 2016.)
[LTN 80, 29/4/16]