Payments of a deceased’s superannuation death benefits will usually be paid to people who are considered “dependants” under the SIS Act or in accordance with the deceased’s BDN. Dependants within the meaning of the Act include:
- The Executor or Administrator of an Estate (for the purposes of payment to the estate)
- Defacto spouses
- Same sex couples living together on a genuine domestic basis
- Children including, stepchildren, adopted children, adult children and ex-nuptial children
- Financial dependants i.e. reliance on financial support provided
There are two tests which a person must satisfy in order to be classified as being in an interdependent relationship with the deceased.
1) The basic test
Under the first test, two people are in an interdependent relationship if;
- They have a close personal relationship
- They live together
- One or the other provides financial support to the person
- One or the other provides domestic support and personal care to the other person
A close personal relationship is where the parties show an ongoing commitment to the emotional support and well-being of one another. There are a number of factors which are taken into account when determining whether an interdependent relationship exists and these are set out in the SIS regulations.
2) The disability test
Under the second test, if the parties to a relationship fail the first test then they can still be considered in an interdependent relationship if:
- They have a close personal relationship (as defined above)
- Either one or both parties suffer from a disability which makes it difficult for either one of them to meet the criteria of the first test
It is important to note that a Trustee of a superannuation trust fund will exercise the discretion to pay the death benefit to people who are considered “dependants” as the fund will retain concessional taxation treatment.