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Asset-tested income stream (long term)
An income stream is an asset-tested long term income stream if it is:
- not an asset-test exempt income stream;
- and has:
- a specified term greater than 5 years (i.e. not for the life of an individual or individuals);
- a specified term of 5 years or less, that is equal to or greater than the purchaser's life expectancy; or
- the income stream pays for the life of the individual or individuals and was purchased or acquired before 1 July 2019.
Note: income streams that pay for the life of an individual or individuals, purchased or acquired on or after 1 July 2019, are assessed as asset-tested lifetime income streams.
Legislative reference: subsection 5J(1) Veterans' Entitlements Act 1986
An income stream is an asset-test exempt income stream if it is purchased before 20 September 2007 and must be:
- paid for the income support recipient's lifetime for lifetime products; or
- paid for a fixed period based on the income support recipient's life expectancy or that of their reversionary partner's;
and:
- make payments at least annually;
- specify the payment to be made in the first year;
- not pay less than the previous year's payments in any year;
- limit indexation to no more than 5% or CPI plus 1% in any year;
- convert the purchase price wholly into income;
- have no residual capital value;
- have limited commutation;
- have limited reversionary benefits;
- have limited transferability;
- not be able to be borrowed against; and
- in respect of market-linked income streams, must make payments according to the formula in the Superannuation Industry (Supervision) Regulations 1994.
Legislative reference:
Veterans' Entitlements Act 1986:
- section 5JA - lifetime income streams;
- section 5JB - life expectancy income streams; or
- section 5JBA - market-linked income streams.
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