Why is the meaning of dependant for super and tax purposes important? It’s particularly important in relation to the payment and tax treatment of superannuation death benefits.

There are different requirements for each of the following purposes:

• Eligibility to receive a member’s death benefits directly from a super fun (subject to the fund’s governing rules)
• Eligibility to receive a member’s death benefits in pension form (subject to the fund’s governing rules)
• The availability of the death benefit dependant tax concessions

It is generally understood that, on a person’s death, their superannuation benefits can only be paid directly to one or more ‘dependants’ as defined for superannuation purposes, unless they are paid to the deceased’s legal personal representative to be distributed in accordance with the deceased’s Will.

It is also generally understood that super death benefits are tax-free to the extent that they are paid to persons who are ‘dependants’ for tax purposes.

What is perhaps not so well understood is that the meaning of ‘dependant’ differs slightly for superannuation and tax purposes.

For superannuation purposes, a ‘dependant’ of the deceased comprises:

• Their spouse (including de facto spouse)
• Their child (of any age)
• A person in an ‘interdependency relationship’ as defined with the deceased
• A person who was financially dependent on the deceased.

However, for tax purposes, a ‘dependant’ (or ‘death benefits dependant’) of the deceased comprises:

• Their spouse or former spouse (including de facto spouse)
• Their child under the age of 18
• A person in an ‘interdependency relationship’ as defined with the deceased
• A person who was financially dependant on the deceased

Therefore, while a former spouse is dependant for tax purposes, they are not a dependant for superannuation purposes, and so super death benefits generally cannot be paid directly to a former spouse.

Also, while a child of any age is a dependant for super purposes, only children under the age of 18 are dependants for tax purposes. This means that while a child of any age may receive super death benefits directly, those benefits will generally only be tax-free if the child is under 18.

The conditions for the existence of an interdependency relationship under tax law are generally (but not exactly) the same as those applying under superannuation law.