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General Provisions for Assessing Superannuation

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Principles for assessing superannuation assets

DVA's assessment of a pensioner's superannuation assets depends on:

Assessment in the accumulation phase

VEA →

No income or asset value is assessed from superannuation in the accumulation phase where the person is below pension age. If the person has reached pension age, the superannuation is assessed under the income and assets tests as a financial asset.     

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Deeming provisions

Chapter 9.5

 

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Exemption from assessment after reaching pension age

VEA →

Superannuation in the accumulation phase may be exempted from the assets test in certain limited circumstances. Delegation to exempt superannuation in these circumstances is held by the National Manager, Rehabilitation and Entitlements Policy Group. Exemptions are only allowed where the person cannot access their superannuation due to:

  • a legislative preclusion (eg court order),
  • a contractual preclusion (eg conditions of release not met),
  • the fixed term not having expired for contracts entered into before 20 August 1996 (only if the original contract has not expired),
  • the rules of the fund as at 20 August 1996 preventing release (the exemption would only apply to the balance as at 20 August 1996),
  • the superannuation being a traditional endowment or life superannuation contract entered into before 20 August 1996 and not having been varied since (the exemption would only to apply to the balance and additional amounts specified in the contract as at 20 August 1996).
Assessment in the drawdown phase

VEA →

 

Part IIIB, Division 4 VEA – Income from income streams

Part IIIB, Division 11, Subdivision A VEA – Value of person's assets

 

VEA → (go back)

The income and asset value of superannuation in the drawdown phase is assessed according to the income stream rules. This also applies if the superannuation is in the drawdown phase and the person is below pension age.    

 

Assessment of whole of life superannuation policies

Whole of life superannuation policies are subject to the same rules as other superannuation funds. However, whole of life conventional life insurance products are treated differently.     

 

The assessable asset value of whole of life superannuation policies is the accumulated superannuation benefit shown on the pensioner's latest statement of account. The amount payable from the policy in the event of the death of the insured party is not relevant.

Splitting of superannuation interests on separation

A superannuation interest in the accumulation phase may be split where members of a couple separate and one or both members of the couple have a superannuation interest. The split may be made under a superannuation agreement or a court order. The options available for splitting a superannuation interest are:

  • Pay a lump sum to the non-member spouse
  • Create a new superannuation interest in the non-member spouse's name in the same superannuation fund
  • Transfer or roll-over a lump sum to a retirement savings account or another superannuation fund in the non-member spouse's name.

Regardless of the option chosen for splitting a superannuation interest, the non-member is not entitled to receive any further payments. Different rules apply to superannuation interests in the drawdown phase.    

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Splitting superannuation interests in the drawdown phase

Section 10.5.6

 

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Deprivation not to apply on splitting superannuation interest

The deprivation rules do not apply to the splitting of a superannuation interest pursuant to an agreement or a court order.


 

 

The accumulation phase is the period during a person's working life in which superannuation contributions are paid into a superannuation fund, with the aim of maximising the sum available for retirement through investment and tax concessions.

The draw down phase is the period, after retirement from the workforce, when a person receives regular payments of superannuation benefits from their superannuation fund or an income stream product.

Currently, the pension age for a veteran is 60 years of age (VEA 5QA).

The pension age for a non-veteran is determined by the table below:

Date of birth (both dates inclusive)

Age Pension age

1 July 1952 to 31 December 1953

65 years and 6 months

1 January 1954 to 30 June 1955

66 years

1 July 1955 to 31 December 1956

66 years and 6 months

On or after 1 January 1957

67 years

 

According to section 5J(1) of the VEA a financial asset means;

 

According to section 5J(1) of the VEA, an income stream includes:

  • an income stream arising under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993; or
  • an income stream arising under a public sector scheme (within the meaning of that Act); or
  • an income stream arising under a retirement savings account; or
  • an income stream provided by a life insurance business (within the meaning of the Life Insurance Act 1995); or
  • an income stream provided by a friendly society (within the meaning of the Income Tax Assessment Act 1996); or
  • an income stream designated in writing by the Commission for the purposes of this definition, having regard to the guidelines determined under subsection 5J(1F) of the VEA;
  • but does not include any of the following:
  • available money;
  • deposit money;
  • a managed investment;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; or
  • gold, silver or platinum bullion.

 

 

Section 5J(1) of the VEA defines a superannuation benefit, in relation to a person, as a benefit arising directly or indirectly from amounts contributed (whether by the person or by any other person) to a superannuation fund in respect of the person.

 

 

A superannuation fund is defined in the VEA as being:

  • a fund that is or has been a complying superannuation fund within the meaning of section 45 of the Superannuation Industry (Supervision) Act 1993 in relation to any tax year; or
  • an Australian superannuation fund (within the meaning of the Income Tax Assessment Act 1997) that is not a complying superannuation fund mentioned in paragraph (a) in relation to any tax year; or
  • a scheme for the payment of benefits upon retirement or death that is constituted by or under a law of the Commonwealth or of a State or Territory; or
  • an RSA within the meaning of the Retirement Savings Accounts Act 1997; or
  • any of the following funds (unless the fund is a foreign superannuation fund):
  • a fund to which paragraph 23(jaa), or section 23FC, 121CC or 121DAB, of the Income Tax Assessment Act 1936 (as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1989) has applied in relation to any tax year;
  • a fund to which paragraph 23(ja), or section 23F or 23FB, of the Income Tax Assessment Act 1936 (as in force at any time before the commencement of paragraph (a) of the definition of superannuation fund in former subsection 27A(1) of the Income Tax Assessment Act 1936) has applied in relation to the tax year that started on 1 July 1985 or an earlier tax year;
  • a fund to which section 79 of the Income Tax Assessment Act 1936 (as in force at any time before 25 June 1984) has applied in relation to the tax year that started on 1 July 1983 or an earlier tax year.

To roll-over, in relation to an eligible termination payment, means to invest all or part of the payment in an approved superannuation or roll-over fund, according to the requirements of section 27D of the Income Tax Assessment Act, 1936.