Date amended:
External
Policy

This table shows how to calculate the asset value of Allocated (Account-based) or Market Linked income streams where the superannuation agreement or court order specifies a base payment split, rather than a percentage, from the original Family Law Affected income stream owned by the member.

For Asset-test Exempt 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

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

Determine the account balance of the original FLA income stream at the operative time.

4

Calculate the asset value of the primary FLA income stream using the formula:

MSNPP x account balance of original FLA income stream

Calculate the asset value of the secondary FLA income stream using the formula:

NMSNPP x account balance of original FLA income stream

Asset value 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 not reviewed until the date of the first splittable payment.

Calculating the asset value from the date of the first splittable payment

The asset value is the account balance remaining after the base amount has been paid out in full to the former partner. 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.
Impact of subsequent commutations on asset value

Any commutations made after the operative time are reduce the account balance and therefore the asset value of the primary FLA income stream.

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 FLA income stream.

3

Determine the proportions in which the original FLA income stream is split for the owner (MSPROP) and the former partner (NMSPROP).

NMSPROP = base amount payment / account balance of original FLA income stream immediately before the date of the first splittable payment.

MSPROP = 1 - NMSPROP

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 FLA income stream by applying MSPROP 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.