Issue: 488
Sent: 31-07-2012 13:43:02
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Australia Fights to Keep Its CarsA How To Book Of Self Managed Super FundsAre Grandkids Dependants?Email Marketing For Planners
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Are Grandkids Dependants?

Click here to buy - A How To Book of SMSF's by Tony Negline
Tony Negline

Some commentators believe that it's quite easy for Grandchildren to be made dependants of their Grandparents for super death benefit purposes.

These commentators seem to have based their thoughts on a few relevant Court cases.

However as I discussed in my recent DIY Super column in The Australian the Tax Office don't seem to share this view. Here's what I had to say about this topic:

The tax office says that you must prove your grandchildren are substantially dependant on you for financial support.  For example meeting basic daily needs and basic necessities.
The costs of social outings, non-essential medication and pocket money aren't considered to be basic daily needs or necessities.  Also excluded are the costs of improving a child's standard of living as well as buying school books, lunches and uniforms.
However school fees combined with the payment of necessary food, clothing and shelter might signify financial dependency.
It's unclear if private school fees on their own show sufficient financial dependency.  Given that private schooling is not a necessity it's probably doubtful.
The ATO also wants to see:
·  substantial assistance for a grandchild - where a child lives with others then a grandparents financial contribution has to be pro-rated towards the others living in the home
·  regular and continuous financial assistance
·  documented and itemised expenditure
This strict interpretation by the ATO might cause many people quite a deal of angst especially as some Court cases haven't been as strict as the Tax Office.

This issue is also important for adult children still living at home and their parents. I discuss this issue from this perspective in today's Australian. Many similar issues to those outlined above arise.

In the ATO's view seems to be that "typically adult children aren't considered to be in an interdependency relationship with their parents because there is no intention that their shared life together will be permanent."

In its view many adult children living at home will merely be sharing normal familial relationships because the adult child works and earns a living. In other words there's a choice to living at home based around convenience, lower expenses and, in many cases, being pampered by their parents.

Finally please consider purchasing a copy of this book "A How To Book Of Self Managed Super Funds". You can look at the contents page at the following link:

For details of the changes made from version 4 to version 5 visit:

As you'll see from the list there have been many changes.

Two purchase options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link:

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