Dependency Declaration for Superannuation and Income Tax Purposes

About Product

At the time of death, if a beneficiary of the deceased member was a dependant as defined in the Income Tax Assessment Act 1997, they may take a lump sum payment tax free.

The LYD "Dependancy Declaration for Superannuation and Income Tax Purposes" allows an SMSF Member to make a declaration in relation to financial dependants.

► FREE

► The master document has been signed off by LY Legal and is congruent with Australian law.

General Information

There are a number of legislative cases which highlight the need to establish who is a financial dependant of a person.

The LYD "Dependancy Declaration for Superannuation and Income Tax Purposes" allows an SMSF Member to make a declaration in relation to financial dependants.

Benefits

Simple and easy to effect.
Provides an evidentiary base for the Trustee to make a decision on dependancy at time of death.
If proof of dependancy is a success, then beneficiaries may receive any lump sum tax free.
It can be used for income tax return purposes by the beneficiary in relation to any lump sum payment and more importantly the tax consequences of the receipt by the beneficiary of the payment.
Signed off by LY Legal

Frequently Asked Legal Questions

Is a Dependancy Declaration necessary?

It is not necessary but without the declaration any evidence will have to be gathered and garnered by the beneficiary. The Dependancy Declaration goes to the proof of dependancy for the purposes of the Income Tax Assessment Act 1997.

Is the Dependancy Declaration legal?

The Dependancy Declaration has been prepared by LY Legal and operates to define the dependancy of a proposed beneficiary.

How many Dependants can there be?

As many as possible. There is no limit on the number as to the number of dependants an SMSF member can have. However care should be taken to provide statements that satisfy true dependancy of the beneficiary in respect of the member. Note that the LYD Dependancy Declaration for Superannuation and Income Tax Purposes allows for up to 3 dependants to be declared at a time. Multiple documents may be executed where needed.

How can I determine if someone is a dependant?

The purpose is not to be absolutely certain under the law. There are cases where joint bank accounts have been determined as financial dependants. The best information we can provide is APRA’s guideline on dependency:

“There is no need for one person to be wholly dependent upon another for that person to be a ‘dependant’ for the purposes of the payment standards. Financial dependency can be established where a person relies wholly or in part on another for his or her means of subsistence. Nor must the recipient show a need for the money received from the deceased member in order to qualify as a dependant. Moreover, since partial financial dependency can generally be sufficient to establish a relationship of dependence, it is possible for two persons to be dependent on each other for the purposes of the payment standards.”

The key is to get the declaration executed and that goes toward the evidence at the time of death. If you require additional legal advice, please contact LY Legal at info@abbottmourly.com.au or email support@lightyeardocs.com.au

How long does this document take to assemble?

Depending on the complexity of the data, this document should take approximately 10-25 secs to assemble. If you experience timing outside of this please contact Support via the Surge app, alternatively please read this article for troubleshooting tips https://info.lightyeardocs.com.au/supportcentre/troubleshooting-longer-assembly-times-timeouts .

Is this document a legal document?

All master documents have been signed off by LY Legal lawyers. Tony Anamourlis of LY Legal advises that “at no time, due to inbuilt legal protection and security measures can a user change or amend a document on the LYD platform that has been signed off by a practicing solicitor. To do so would result in the user drafting a document of a legal nature and engaging in the provision of legal services. In addition, it would be a breach of copyright. In our opinion when completing the form fields through the LYD platform, users and their employees are merely carrying out an administrative task which is not the provision of legal advice.”

However in some complex areas such as the insertion of a varied range of client instructions into a Will or other such documents the user must be mindful of the extent to which a document is being drafted by the user rather than merely the administrative task of completing a form where the relevant fields are inserted into the reviewed and signed legal document provided by LY Legal.

The above advice is born out of numerous cases dating back to Re Sanderson, Ex parte Law Institute of Victoria [1927] VLR 394, 397 where the Court held:

“if a person does a thing usually done by a solicitor, and does it in such a way as to lead to the reasonable inference that he is a solicitor – if he combines professing to be a solicitor with action usually taken by a solicitor – I think he then does act as a solicitor.”

Likewise in ACCC v Murray (2002) 121 FCR 428, 448 where Murray was building a franchise business that involved the legal writing and drafting of Wills from scratch based on the client’s personal circumstances. The Court held that this process was legal work.

Is the document easy to read?

All LYD products are written in plain English and assessed for readability. If at any time you come across any errors, please contact support@lyd.com.au.

What lawyers sign off on the LYD documents?

All LYD documents are prepared and signed off by LY Legal.

Are the LYD documents reviewed regularly?

All LYD documents form part of the LYD internal review process. We review all documents at least annually or when required to do so due to changes in legislation. Further details of this process and a review schedule is include on this website.