Practitioners must be conscious of the volume of evidence required to support a claim of financial dependency to the ATO with regard to the legitimacy of superannuation death benefit recipients, according to a sector expert.
“If you have a look at some of the [recent private binding] rulings, you will notice that there is a mountain of evidence provided to the ATO to support the idea that there is a financial dependency relationship [allowing certain individuals to receive a superannuation death benefit],” Accurium senior SMSF educator Anthony Cullen told attendees of a technical webinar hosted last week.
“[This includes] bank statements, mortgage statements, proof that [the client] has purchased a house, proof that there have been transfers from one person to another, proof that the deceased was paying for the utilities and the food and the clothes [for the death benefit recipient in question].”
In light of this fact, Cullen pointed out advisers and accountants have to ask themselves whether they are going to be asking for this type of information.
“If not, how are we going to be in a position to make that call the ATO is making with all of that information?” he said.
Further, he noted the timing of when the gathering of the required information occurs is very important in relation to the process.
“All of that information is [prior to] the date of [the member’s] death. Now when we’re talking about financial dependency, that is measured on the date of death. So you need all of this evidence leading up to that point [if you are] saying [for example] when my parent died I’ve had years of being a financial dependent of them,” he said.
“So [the client] will need that proof over a large period of time. It comes down to what the relationship is at the date of death.”
