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Why is the Meaning of Child for Super & Tax Purposes Important?

PUBLISHED MAY 2021

The meaning of child is relevant for a range of purposes including:

                             1.  Eligibility to receive member’s death benefits directly from a super fund (subject to the fund’s governing rules),

                             2.  Eligibility to receive a member’s death benefits in pension form (provided the child is under 18, under 25 and financially dependant                                       or suffering from a qualifying disability and subject to the fund’s governing rules),

                             3.  The availability of the tax concessions in respect of superannuation death benefits.

 The definition is also used for the purposes of various Superannuation Industry (Supervision) Act 1993 (SIS) investment restrictions including:

                              –  Who is a relative for the purpose of the prohibition against super fund’s lending or providing financial assistance to members or                                         their relatives, and

                              –  Who is a related party of a super fund for the purposes of the restrictions on acquiring assets from a related party or holding in-                                          house assets.

Who qualifies as a child under super law?

For SIS and tax law purposes, a child of a person includes:

                             –  An adopted child, a step child or an ex nuptial child of the person

                             –  A child of the person’s spouse, and

                             –  Someone who is a child of the person within the meaning of the Family Law Act 1975.

 A child of the person’s spouse (which includes a de facto spouse) or a child of the person under family law automatically qualifies as a child (and therefore a dependant) of the person without needing to prove interdependency or ‘ordinary meaning’ dependency.

Why is a child of the person’s spouse included in the definition?

The inclusion of a child of the person’s spouse recognises children of an opposite-sex or same-sex   de facto partner by a former relationship.  The effect is that a child of the person’s spouse also automatically qualifies as a child of the person, without needing to be an adopted child or stepchild of the person.

Impact of divorce or death on stepchildren and children of spouses

At common law, a stepchild means a child of a husband or wife by a former marriage.  The continued existence of a stepchild/step-parent relationship depends on the continuity of the marriage of the child’s natural parent with the step-parent.  If the marriage ends, either by divorce or death, the stepchild/step-parent relationship will cease.

For more information regarding your personal circumstances, it is recommended you see your solicitor.