C25/2007 Removal of Assets Test Exemption of Income Streams From 20 September 2007

Purpose

This instruction is to alert staff to the changes to the assets test assessment of income streams from 20 September 2007, including the removal of the partial assets test exemption of income streams.

Background

The changes arise from the Plan to Simplify and Streamline Superannuation initiative, announced in the 2006‑07 Budget.

Summary of the changes

All income streams purchased on or after 20 September 2007 will be fully assessed under the assets test.

In limited circumstances, income streams purchased after 20 September 2007 via a rollover or commutation from an existing income stream that is either assets‑test exempt or partially assets‑test exempt may retain the exemption.

Income streams purchased prior to 20 September 2007 and assessed as assets‑test exempt or partially assets‑test exempt will retain their exemption, even if the person only starts to receive pension after 20 September 2007.

Updated  reference information

Part 10, Chapter 4 and Part 10, Chapter 5 of the CLIK Policy Library is currently being re-written to reflect policy and legislation changes to the assessment of income streams commencing from 20 September 2004 and 20 September 2007. Full details of the changes will be available as soon as possible at Part 10, Chapter 5, Section 4, Assets Assessment of Income Streams.

You & Your Pension, Fact Sheet IS96: Income Streams and the form D — 0 — 563 – Income Stream Schedule for Veterans' Affairs assessment purposes have been reviewed and updated.

Fact Sheet IS96: Income Streams has been amended to reflect the new rules.

Impact on aged care assets assessment

As a continuation of the harmonisation of aged care and pension assessments, the new income stream pension assessment rules will also apply to aged care assessments (ACA) cases. The whole value of any income stream purchased on or after 20 September 2007 will be assessable for ACA cases.

Income streams purchased before 20 September 2007 that are classified as partially assets test exempt for pension purposes will continue to be fully exempt for ACA purposes.  There are business rules in place to allow the sys — tem to determine the applicable asset values.

Contact officer

The contact officer for this instruction is Kirrily Lucas on x16525.