Dependant (Tax Definition)

The tax definition of dependant is crucial for determining whether superannuation death benefits are taxed. It differs significantly from everyday understanding and other legal definitions. Under section 302-195 of the Income Tax Assessment Act 1997, a tax dependant includes: a current or former spouse or de facto spouse; children under 18 years; anyone financially dependent on the deceased; and anyone who had an interdependency relationship with the deceased. Financial dependency is assessed at the time of death and considers whether the beneficiary relied on the deceased for financial support for ordinary living expenses. Part-time employment or partial support can still constitute financial dependency - it doesn't require total dependence. Adult children living at home with limited income may qualify as financial dependants. An interdependency relationship exists when two people (whether related or not) have a close personal relationship, live together, where one or both provides financial and domestic support and personal care to the other. This can include adult children caring for elderly parents, or siblings living together in mutual support arrangements. A partial interdependency relationship can exist where a close personal relationship and other elements existed, but the parties didn't live together due to physical, intellectual, or psychiatric disability. The tax dependant definition is broader than the super law definition for binding death benefit nominations, creating potential planning opportunities and complexities. Expert advice is recommended for complex family situations.