Base Amount Payment Splits - Asset-test Exempt Income Streams
This table shows how to calculate the asset value of an Asset-test Exempt Income Stream where the superannuation agreement or court order specifies a base payment amount, rather than a percentage, from the original Family Law Affected income stream, owned by the member.
For Allocated or Account-based Income Streams, Defined Benefit Income Streams, Asset-tested Long Term Income Streams or Lifetime Income streams, see the relevant pages under 10.5.6 Family Law Affected Income Streams.
Calculating the asset value between the operative time and the date of the first splittable payment for Asset-test Exempt Income Streams
Note that the assets test assessment depends on the purchase date of the income stream:
- for income streams purchased before 20 September 2004, no asset value is assessed
- for income streams purchased between 20 September 2004 and 19 September 2007, 50% of the asset value is assessed
- for income streams purchased from 20 September 2007, 100% of the asset value is assessed.
Step | Action |
1 | Establish the value of the base amount paid to the former partner (BA) and the value (V) of the relevant superannuation interest at the operative time. |
2 | Determine the proportions for the former partner (NMSPROP) and the owner (MSPROP). NMSPROP = BA / V MSPROP = 1 - NMSPROP |
3 | Calculate the notional purchase price (NPP) at the operative time for the original FLA income stream. The NPP = the purchase price of the original FLA income stream on the commencement day less any commutations made before the operative time. |
4 | Calculate the NPP for the primary and secondary FLA income streams by applying MSPROP and NMSPROP respectively to the NPP. NPP for the primary FLA income stream: (MSNPP) = NPP x MSPROP NPP for the secondary FLA income stream: (NMSNPP) = NPP x NMSPROP |
5 | Calculate the asset value of the primary FLA income stream using the formula: MSNPP – MSNPP / relevant number x term elapsed Calculate the asset value of the secondary FLA income stream using the formula: NMSNPP – NMSNPP / relevant number x term elapsed Relevant number is the relevant number of the original FLA income stream on its commencement day. Term elapsed is the number of years elapsed since the commencement day of the original FLA income stream. |
Asset value generally not reviewed until date of first splittable payment
The asset value calculated between the operative time and the date of the first splittable payment is generally not reviewed until the date of the first splittable payment. However, the value is reviewed if the former partner's base value amount is paid out in full prior to the date of the first splittable payment.
Calculating the asset value from the date of the first splittable payment
This table shows how to calculate the asset value of the income stream. Note that the assets test assessment depends on the purchase date of the income stream:
- for income streams purchased before 20 September 2004, no asset value is assessed
- for income streams purchased between 20 September 2004 and 19 September 2007, 50% of the asset value is assessed
- for income streams purchased from 20 September 2007, 100% of the asset value is assessed.
Step | Action |
1 | Determine the proportions in which the original FLA income stream is split for the owner (MSPROP) and the former partner (NMSPROP). MSPROP = primary FLA income stream payment / original FLA income stream payment NMSPROP = secondary FLA income stream payment / original FLA income stream payment The primary and secondary FLA income stream payments are calculated from the payment after the first splittable payment. The original FLA income stream payment is the payment at the time of the first splittable payment as if the payment split had not occurred. |
2 | Calculate the notional purchase price (NPP) at the operative time for the original FLA income stream. The NPP = the purchase price of the original FLA income stream on the commencement day less any commutations made before the operative time. |
3 | Calculate the NPP for the primary and secondary FLA income streams by applying MSPROP and NMSPROP respectively to the NPP. NPP for the primary FLA income stream (MSNPP) = NPP x MSPROP NPP for the secondary FLA income stream (NMSNPP) = NPP x NMSPROP |
4 | Calculate the asset value of the primary FLA income stream using the formula: MSNPP – MSNPP / relevant number x term elapsed Calculate the asset value of the secondary FLA income stream using the formula: NMSNPP – NMSNPP / relevant number x term elapsed Relevant number is the relevant number of the original FLA income stream on its commencement day. Term elapsed is the number of years elapsed since the commencement day of the original FLA income stream. |
Impact of subsequent commutations on asset value
Any commutation made after the operative time is apportioned between the primary and secondary FLA income streams in the same proportion as the original percentage payment split. The commutation will affect the NPP and therefore the asset value of both the primary and secondary FLA income streams.
Subsequent reviews of asset value
FLA income streams are subject to the same asset value reviews as other income streams. The first six or twelve monthly review of the primary and/or secondary FLA income streams is taken from the time of the previous review date of the original FLA income stream. If the original FLA income stream has not yet had its first review, the review of the primary and/or secondary FLA income stream is taken from the commencement day of the original FLA income stream.
Income test assessment
This table shows how to calculate the assessable income from the income stream.
Step | Action |
1 | Any income paid between the operative time and the date of the first splittable payment is an exempt lump sum. Any amount paid out of the first splittable payment is also an exempt lump sum. Any income stream payments after the first splittable payment are assessable income. |
2 | Obtain the gross income for the primary and secondary FLA income streams. |
3 | Determine the proportions in which the original FLA income stream is split for the owner (MSPROP) and the former partner (NMSPROP). MSPROP = primary FLA income stream payment / original FLA income stream payment NMSPROP = secondary FLA income stream payment / original FLA income stream payment The primary and secondary FLA income stream payments are calculated from the payment after the first splittable payment. The original FLA income stream payment is the payment at the time of the first splittable payment as if the payment split had not occurred. |
4 | Calculate the notional purchase price (NPP) immediately before the date of the first splittable payment. The NPP = the purchase price of the original FLA income stream on the commencement day less any commutations made before the date of the first splittable payment. |
5 | Calculate the NPP for the primary and secondary FLA income streams by applying MSPROP and NMSPROP respectively to the NPP. NPP for the primary FLA income stream (MSNPP) = NPP x MSPROP NPP for the secondary FLA income stream (NMSNPP) = NPP x NMSPROP |
6 | Calculate the deduction amount for the primary and secondary FLA income streams. Deduction for the owner = MSNPP / relevant number Deduction for the former partner = NMSNPP / relevant number Relevant number is the relevant number of the original FLA income stream on its commencement day. |
7 | Reduce the gross income of the primary and secondary FLA income streams by their respective deduction amounts. |
Impact of subsequent commutations on assessable income
Any commutation made after the operative time is apportioned between the primary and secondary FLA income streams in the same proportion as the proportions of the regular splittable payments. The commutation will affect the gross income, NPP and therefore the deduction amount for both the primary and secondary FLA income streams.
Source URL: https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1056-special-provisions-regarding-family-law-affected-income-streams/base-amount-payment-splits-asset-test-exempt-income-streams