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10.5 Income Streams

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This chapter contains information on the various income streams [2] that affect a pensioner's payments and the assessment of income [2] and assets [2] from an income stream.

See Also

Income Streams

Chapter 9.1 Income and Assets Test Principles [3]

Chapter 10.4 Superannuation Funds [4]

Chapter 9.5 Deeming Provisions [5]

Chapter 10.1 Ordinary Income [6]

Chapter 12.1 Recipient Obligations [7]


According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

According to section 5H of the VEA [9] income is:

  • an amount earned, derived or received by a person for the person's own use or benefit;
  • a periodical payment by way of gift or allowance; or
  • a periodical benefit by way of gift or allowance.

 

 

An asset means any property, including property outside Australia.

10.5.1 Overview of Income Streams

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Last amended 
Monday, July 1, 2019
What is an income stream?

    VEA → [11]

Section 5J

An income stream [2] is a series of regular payments, made for life or for a fixed term, which are purchased with a capital sum or made directly from accumulated superannuation contributions. An income stream can only be paid by one of the following entities:

  • an entity regulated under the Superannuation Industry (Supervision) Act 1993
  • a public sector superannuation scheme
  • a retirement savings account under the Retirement Savings Account Act 1997
  • a life company registered under the Life Insurance Act 1995
  • a structure designated in writing by the Commission, or
  • a Family Law Affected (FLA) income stream.

Investments referred to as income streams may be known by the following names:

  • superannuation pensions, including defined benefit income streams;
  • account-based pensions or transition to retirement pensions;
  • market-linked pensions or annuities;
  • allocated pensions;
  • immediate annuities.
Types of income streams

Income streams are classified into the following assessment categories, each of which are assessed under different rules:

  • asset-test exempt income streams [2],
  • asset-tested income stream (long term) [2],
  • asset-tested income streams (long term deemed) [2],
  • asset-tested income streams (short term) [2] and
  • asset-tested income streams (lifetime).    More → [12]
Asset-test exempt income stream characteristics

An income stream can only be asset-test exempt if it is a defined benefit income stream [2], or meets all of the following criteria:    

More → [13]
  • is purchased before 20 September 2007,
  • is payable for a specified term dependent on the type of income stream,
  • meets criteria dependent on the type of income stream regarding how payments under the income stream are calculated,
  • commences on the day it is purchased or acquired,
  • converts the purchase price [2] wholly into income,
  • has no residual capital value [2],
  • is non-commutable except in limited circumstances,
  • has limited reversionary benefits,
  • cannot be used as security for borrowing, and
  • if the income stream is a lifetime or life expectancy income stream paid from a self managed superannuation fund or a small APRA fund, has a current actuarial certificate in force.    More → [14]
Asset-tested income stream characteristics

Asset-tested income streams are income streams:

  • purchased before 20 September 2007 which do not meet all the characteristics of an asset-test exempt income stream, or
  • purchased on or after 20 September 2007

and are either:

  • long term, where:
    • the specified term of the contract is:
      • more than five years, or
      • five years or less, provided the term is equal to or greater than the owner's life expectancy, or
    • the income stream pays for the life of the owner, and
    • it was purchased before 1 July 2019, or
  • short term, where:
    • ​the term is five years or less, and
    • it does not have the characteristics of an asset-test exempt income stream, an asset-tested income stream (long term) [2] or (lifetime), or
  • lifetime, where:
    • ​it was purchased on or after 1 July 2019,
    • once regular payments commence, the payments continue for the rest of the owner's life,
    • the amount paid are based on the age, life expectancy or other factors relevant to the mortality of the owner, and
    • it does not have the characteristics of an asset-test exempt income stream or a defined benefits scheme.
Defined benefit income streams

A defined benefit income stream is an income stream paid from a defined benefit superannuation fund (eg PSS). Defined benefit income streams cannot be purchased from retail providers. The income stream must meet the definition of a 'pension' and the person's interest in the income stream must be a 'defined benefit interest' under the Superannuation Industry (Supervision) Regulations 1994.    

More → [15]
 
Hybrid income streams

Some products combine account-based income streams with lifetime income streams.  In these cases, the product will be assessed as two separate income streams.  The account-based income stream will be assessed as an asset-tested income stream (long term) and the lifetime component will be assessed as an asset-tested income stream (lifetime).

Impact of splits under the Family Law Act 1975

Income streams may be split as a part of a divorce settlement under the Family Law Act 1975. This can affect how the income stream is assessed.    

More → [16]

 

What an income stream is not

An income stream is not:

  • a private arrangement with a person or entity that cannot provide an income stream,     More → [17]
  • a loan repayment arrangement,
  • a foreign pension provided through the national social security system of an overseas country,    More → [18]
  • an overseas annuity, or    More → [19]
  • a financial asset [2] as defined in the VEA for the purposes of the deeming provisions [2] except for certain asset-tested income streams.    More → [20]
Exemptions from income stream provisions

Certain people who would be financially significantly disadvantaged by the income stream provisions introduced from 20 September 1998 may qualify for an exemption from the income stream provisions.    

More → [21]

 

Assessment of income streams

Income streams are assessed according to the term and characteristics of the income stream contract or governing rules.  The commencement date of the income stream and whether the owner has been in continuous receipt of an income support payment may also be relevant.   

More → [22]

 

Life expectancy tables

Life expectancy [2] tables are used to determine the relevant number [2] for income streams. The commencement day [2] of the income stream determines which life expectancy table to use.    

More → [23]

 

 


 

 

Section 5J

An income stream [2] is a series of regular payments, made for life or for a fixed term, which are purchased with a capital sum or made directly from accumulated superannuation contributions. An income stream can only be paid by one of the following entities:

 

Types of Income Stream

Section 10.5.2 [24]

 

More → (go back) [25]

Assets-test exempt income streams

Section 10.5.2 [24]

 

More → (go back) [26]

 

Actuarial Certificate

10.5.5/Additional Documentation Required from Self managed Superannuation Funds and Small APRA Funds [27]

 

More → (go back) [28]
Defined benefit income streams

 

Defined Benefit Income Streams

10.5.2/Asset Test Exempt Income Streams – Defined Benefit [29]

 

More → (go back) [30]

 

Family Law Affected Income Streams

10.5.2/Family Law Affected Income Streams [31]

Section 10.5.6 [32]

 

More → (go back) [33]

 

10.1.7/Income from Private Annuities [34]

10.2.4/Assessing Private Annuities [35]

 

More → (go back) [36]

 

Income from Overseas Pensions

10.1.5/Income from Foreign Pensions [37]

 

Assessment of Comparable Foreign Pension Payments

Section 3.7.5 [38]

 

More → (go back) [39]

 

Income from Overseas Annuities

10.1.7/Income from Overseas Annuities [40]

 

Assessment of Overseas Annuities

10.2.4/Assessing Overseas Annuities [41]

 

More → (go back) [42]

 

Deeming Provisions

Chapter 9.5 [5]

 

More → (go back) [43]

 

Gaining an exemption from the income stream provisions

10.5.3/Exemptions from the Income Stream Provisions [44]

 

More → (go back) [45]

 

Assessment of the different categories of income streams under the income and assets tests

Section 10.5.4 [46]

 

More → (go back) [47]

 

Calculating the relevant number for income streams

Section 10.5.7 [48]

 

More → (go back) [49]

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

An income stream is an asset-tested long term income stream if it is:

  • not an asset-test exempt income stream [2];
  • 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-tested long term income stream if it is:

  • not an asset-test exempt income stream [2];
  • 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-tested short term income stream if the term of the income stream is five years or less and it is not any of the following:

  • an asset-test exempt income stream [2];
  • an asset-tested income stream (long term); or
  • an asset-tested income stream (lifetime).

Legislation: subsection 5J(1) Veterans' Entitlements Act 1986

 

 

A defined benefit income stream is an income stream [2]  where the payments are not fully determined by a purchase price [2]. Instead, payments are made with reference to a set formula based on:

  • the person's salary before retirement,
  • years of service, and/or
  • the governing rules [2]of the income stream.

 

 

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

The residual capital value is the amount (if any) remaining at the end of an income stream's term, consisting of a portion of the initial capital invested in the income stream [2].

 

 

An income stream is an asset-tested long term income stream if it is:

  • not an asset-test exempt income stream [2];
  • 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

According to section 5J(1) [8] of the VEA a financial asset means;

  • a financial investment [2], or
  • a deprived asset [2]

 

In 1990 the government introduced legislative changes called “deeming” to simplify the assessment of cash deposits and income from certain investments. These changes were made:

  • in response to pensioner concerns about complex income and assets test rules;
  • to encourage pensioners to maximise their private income.

Deemed income is the minimum rate that the government expects income support pensioners to earn from investments.

Banks created “pensioner accounts” which paid interest at the deeming rate set by the government.

On 1 July 1996 further changes meant the deeming rate was applied to all financial assets as defined in section 5J(1) of the VEA [8].

 

 

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

10.5.2 Description of Income Streams

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This section contains descriptions and definitions of the different assessment categories of income stream [2].


According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

Asset-Test Exempt Income Streams - Lifetime

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Last amended 
Thursday, January 8, 2015

VEA [53]

 

Section 5JA [54] VEA

 

VEA ? (go back) [55]

 

Purchase date

To be an asset-test exempt income stream [2], the income stream must have been purchased before 20 September 2007, unless certain conditions are met. The purchase date also determines whether the income stream is 100% or 50% asset-test exempt.     

More [56]

 

General characteristics of a lifetime asset-test exempt income stream

An asset-test exempt income stream, paid for life has all of the following characteristics:

  • is payable for the pensioner's lifetime,
  • has a fixed annual payment, or an indexed annual payment with indexation capped at no greater than 5% or CPI [2]+1%,
  • commences on the day it is purchased or acquired,
  • converts the purchase price [2] wholly into income,
  • has no residual capital value [2],
  • is non-commutable except in limited circumstances,
  • has limited reversionary benefits, and
  • cannot be used as security for borrowing, and
  • if the income stream is a lifetime income stream paid from a self managed superannuation fund (SMSF) or a small APRA fund (SAF), has a current actuarial certificate in force.      More [57]
Commencement day

The commencement day [2] is the first day of the period to which the first payment under the income stream relates, even if the payment is made at the end of a twelve month period. The commencement day is usually the day the income stream was:

  • purchased, or
  • acquired (for defined benefit income streams that are not purchased).
Term and relevant number of a lifetime asset-test exempt income stream

Although the term of a lifetime income stream is for the life of the beneficiary, the relevant number [2] is either the:

  • life expectancy [2] of the primary beneficiary (ie where there is no nominated reversionary beneficiary), or
  • longest life expectancy of either the primary beneficiary or reversionary beneficiary (ie where there is a nominated reversionary beneficiary or where the income stream is purchased in joint names).

When determining the relevant number the actual life expectancy factors are used (ie there is no rounding). If there is a guaranteed period [2], the relevant number will be based on the life expectancy, not the guaranteed period. The relevant number is always calculated using the person's age on the income stream's commencement day, which is the same as the purchase date for purchased income streams.    

More [58]

 

Exemption not affected by guarantee period

The asset-test exemption for a lifetime income stream is not affected if the income stream provides the following guarantee conditions:

  • if a primary beneficiary dies within the guarantee period, any further payments they would have received in the guarantee period, had they lived, can be paid as an income stream or a lump sum to:
  • a reversionary beneficiary, or
  • the primary beneficiary's estate, if there is no reversionary beneficiary.
  • if a reversionary beneficiary also dies within the guarantee period, any further payments due in the guarantee period can be paid to their estate.

The maximum guarantee period for an income stream purchased:

  • before 20 September 2004 is 10 years
  • on or after 20 September 2004 is the lesser of the person's life expectancy or 20 years.
Amount of annual payments

Payments must be made at least annually. The contract must specify the total amount of payments that may be made in the first year after the commencement day, excluding allowable commutations [2]. In any other year the payments may only vary:

  • by indexed amounts, and
  • allowable commutations.

The yearly indexation cannot be a negative value and must be no greater than:

  • 5% where the indexation method is fixed, or
  • the CPI plus 1% where the indexation method is not fixed.
Purchase price and residual capital value

The purchase price is the amount invested to purchase the income stream, less any allowable commutations. The amount paid as the purchase price must be wholly converted into income. The income stream must have no residual capital value.

Income stream is non-commutable

In order to be assessed as an asset-test exempt income stream, the income stream must be non-commutable except in limited circumstances. The benefit payable after the commutation cannot be greater than the benefit payable before the commutation. Commutation is allowed in the following circumstances:

  • to a reversionary beneficiary or the person's estate on death of the person
  • if the income stream was purchased before 20 September 2004, within ten years of the commencement day, or
  • if the income stream was purchased on or after 20 September 2004, within the shorter of the period of the person's life expectancy on the commencement day or 20 years
  • if the income stream is not a commutation funded income stream, within six months of the commencement day,
  • where the commutation is transferred directly to the purchase of a new income stream with the characteristics of an asset test exempt income stream,
  • to the amount necessary to pay a superannuation contributions surcharge [2] amount,
  • to the amount necessary to pay a hardship amount [2],
  • to the amount necessary to pay the person's spouse or former spouse in a payment split under Part VIIIAA or Part VIIIB of the Family Law Act 1975.
Commutation of non-compliant self managed superannuation or small APRA fund 100% asset-test exempt income streams

In recognition of the global financial crisis of 2008 and 2009, temporary relief has been provided for holders of 100% asset-test exempt income streams, sourced from a SMSF or SAF, who are forced to restructure after failing to meet the high probability test.    

More [59]

 

Security for borrowing

For an income stream to be asset-test exempt, neither of the following can be used as security for borrowing:

  • the capital value of the income stream, or
  • the income [2] from the income stream.
Reductions in payments

Payments may only decrease as a result of:

  • commutation,
  • death of one of the owners of a jointly owned income stream, or
  • on reversion to a reversionary beneficiary.
Transfer to a reversionary beneficiary

In order for a lifetime income stream to qualify for asset-test exempt status, the contract or governing rules [2] must specify that the income stream cannot be transferred to another person, apart from:

  • a reversionary beneficiary on the death of the primary beneficiary, or
  • another reversionary beneficiary on the death of the first reversionary beneficiary.

To ensure that no income is deferred, the payment to a reversionary beneficiary cannot be greater than the primary beneficiary received immediately before death.

Reversion to reversionary beneficiary or death of a joint owner

On reversion to a reversionary beneficiary upon the death of the primary beneficiary or the death of one of the owners of a jointly owned income stream, the income stream is treated as a continuation of the original income stream. The asset-test exempt status, purchase price, commencement day and relevant number remain unchanged. The gross payment may be reduced in accordance with the contract.

Period of payments to reversionary beneficiary

Payments to a reversionary beneficiary must be paid at least annually, either:

  • throughout the reversionary beneficiary's life,
  • if the reversionary beneficiary is a child of the primary beneficiary, or former reversionary beneficiary, at least until the child turns sixteen, or
  • if the child is a full-time student who has turned sixteen, until the earlier of when the student:
  • finishes full-time study, or
  • turns 25.
Removal or change of reversionary beneficiary

Where the reversionary beneficiary is removed or is changed, the income stream is treated as a new income stream from that date. The commencement day is the date that the reversionary beneficiary changed and the purchase price is the net present value of the future income stream payments as calculated by the income stream provider. The relevant number is calculated on the person's circumstances on the new commencement day.


 

 

 

Section 5JA [54] VEA

 

VEA ? (go back) [55]

 

10.5.3/Determining what Proportion of an Asset-Test Exempt Income Stream is Exempt [60]

 

More ? (go back) [61]

 

Actuarial Certificate

10.5.5/Additional Documentation Required from Self managed Superannuation Funds and Small APRA Funds [27]

 

More ? (go back) [62]

 

Determining the relevant number for an asset-test exempt lifetime income stream

Section 10.5.7 Life Expectancy Tables, Pension Valuation Factors and Payment Factors [48]

 

More ? (go back) [63]

 

Waiver of debt under temporary debt relief arrangements

10.5.5/Assessment where Fund Closes or is in Financial Difficulty [64]

 

More ? (go back) [65]

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

The consumer price index (CPI) provides the official measure of inflation in Australia. The CPI measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group (i.e. metropolitan households).

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

The residual capital value is the amount (if any) remaining at the end of an income stream's term, consisting of a portion of the initial capital invested in the income stream [2].

 

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

A guaranteed period ensures that the pension payments will continue to the estate should the owner and the reversionary beneficiary die during the guaranteed period.

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

Superannuation contributions surcharge has the meaning that it has in the Superannuation Contributions Tax (Assessment and Collection) Act 1997.

A person may apply to the Commission in writing to be allowed to commute the whole or part of an income stream because of extreme financial hardship. According to s.5JA of the VEA, the Commission may determine an amount as allowable commutation if these conditions are satisfied:

  •       the person's circumstances are exceptional and could not be reasonably foreseen at the time the person purchased the income stream, and
  •       the person has insufficient liquid assets or other assets (excluding the person's principal home) that could be realised to avoid the extreme financial hardship, and
  •       that amount is required to meet unavoidable expenditure.

According to section 5H of the VEA [9] income is:

  • an amount earned, derived or received by a person for the person's own use or benefit;
  • a periodical payment by way of gift or allowance; or
  • a periodical benefit by way of gift or allowance.

 

 

The governing rules of an income stream are either:

  • a trust instrument,
  • other document or legislation, or
  • combination of them,

governing the establishment and operation of the income stream.

Asset-Test Exempt Income Streams - Life Expectancy

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Last amended 
Thursday, January 8, 2015
VEA → [67]
Purchase date

To be an asset-test exempt income stream [2], the income stream [2] must have been purchased before 20 September 2007, unless certain conditions are met. The purchase date also determines whether the income stream is 100% or 50% asset-test exempt.     

More [68]

 

General characteristics of life expectancy asset-test exempt income streams

An asset-test exempt life expectancy income stream has all of the following characteristics:

  • if the income stream is purchased before 20 September 2004, is purchased on or after the day that the person reaches pension age [2],
  • is payable for a fixed term based on life expectancy [2],
  • has a fixed annual payment, or an indexed annual payment with indexation capped at no greater than 5% or CPI [2]+1%,
  • commences on the day it is purchased or acquired,
  • converts the purchase price [2] wholly into income,
  • has no residual capital value [2],
  • is non-commutable except in limited circumstances,
  • has limited reversionary benefits,
  • cannot be used as security for borrowing, and
  • if the income stream is a life expectancy income stream paid from a self-managed superannuation fund or a small APRA fund, has a current actuarial certificate in force.      More [69]
Jointly owned income streams

Where an income stream is jointly owned, the characteristics of the income stream must be satisfied in relation to each owner.

Commencement day

An asset-test exempt life expectancy income stream's commencement day [2] is the first day of the period to which the first payment relates, even if the payment is made at the end of a twelve month period. The commencement day is usually the day the income stream was purchased.

Term and relevant number of an asset-test exempt life expectancy income stream

The term of the income stream is a fixed term, as specified in the income stream contract, and is also known as its relevant number [2]. To comply as an asset-test exempt income stream the relevant number must meet the criteria in the table below. The relevant number is always calculated using the person's age on the income stream's commencement day, which is the same as the purchase date for purchased income streams.     

More [70]

 

Determination of relevent number for income streams.

Purchase date of income stream

Relevant number requirements

Rounding

Before 20/09/2004

  • If the life expectancy is less than 15 years:
  • life expectancy of the primary beneficiary regardless of whether there is a nominated reversionary beneficiary, or
  • life expectancy of each owner if the income stream is jointly owned, or
  • If the life expectancy is 15 years or more:
  • 15 years or more but not greater than the life expectancy of the primary beneficiary regardless of whether there is a nominated reversionary beneficiary, or
  • 15 years or more but not greater than the life expectancy, of each owner if the income stream is jointly owned.

If not a whole number, may be rounded up at the person's option to the next whole number.

On or after 20/09/2004 and before 01/01/2006

  • at least as long as the primary beneficiary's life expectancy and at most as long as the primary beneficiary's life expectancy as if they were five years younger, or
  • at least as long as the greater of:
  • the life expectancy of the primary beneficiary, and
  • the primary beneficiary's reversionary partner
  • and at most as long as the greater of:
  • the life expectancy of the primary beneficiary, and
  • the life expectancy of the primary beneficiary's reversionary partner as if they were five years younger.

If not a whole number, must be rounded up to the next whole number.

On or after 01/01/2006

  • at least as long as the primary beneficiary's life expectancy and at most as long as the greater of:
  • the primary beneficiary's life expectancy as if they were five years younger, and
  • the period starting on the commencement day and ending on the day on which the primary beneficiary would turn 100, or
  • at least as long as the greater of:
  • the life expectancy of the primary beneficiary, and
  • the life expectancy of the primary beneficiary's reversionary partner, and
  • at most as long as the greatest of:
  • the life expectancy of the primary beneficiary as if they were five years younger,
  • the life expectancy of the primary beneficiary's reversionary partner as if they were five years younger,
  • the period starting on the commencement day and ending on the day on which the primary beneficiary would turn 100, or
  • the period starting on the commencement day and ending on the day on which the primary beneficiary's reversionary partner would turn 100.

If not a whole number, must be rounded up to the next whole number.

Amount of annual payments

Payments must be made at least annually. The contract must specify the total amount of payments that may be made in the first year after the commencement day, excluding allowable commutations. In any other year the payments may only vary by:

  • indexed amounts, and
  • allowable commutations.

The yearly indexation cannot be a negative value and must be capped at the larger of:

  • 5% if the indexation method is fixed, or
  • the CPI plus 1% if the indexation method is not fixed.
Purchase price and residual capital value

The purchase price is the amount invested to purchase the income stream, less any allowable commutations. The amount paid as the purchase price must be wholly converted into income. The income stream must have no residual capital value.

Income stream is non-commutable

In order to be assessed as asset-test exempt, the income stream must be non-commutable except in limited circumstances. The benefit payable after the commutation [2] cannot be greater than the benefit payable before the commutation. Commutation is allowed in the following circumstances:

  • if the income stream was purchased before 20 September 2004:
  • on death of the person to a reversionary beneficiary or the person's estate, or
  • on death of the reversionary beneficiary to another reversionary beneficiary or to the reversionary beneficiary's estate,
  • if the income stream was purchased on or after 20 September 2004:
  • on death of the primary beneficiary where there is no reversionary partner, or
  • where the income stream is paid to the reversionary partner following the death of the primary beneficiary, on death of the reversionary partner,
  • if the income stream is not a commutation funded income stream, within six months of the commencement day,
  • where the commutation is transferred directly to the purchase of a new income stream with the characteristics of an asset-test exempt income stream,
  • to the amount necessary to pay a superannuation contribution surcharge [2] amount,
  • to the amount necessary to pay a hardship amount [2],
  • to the amount necessary to pay the person's spouse or former spouse in a payment split under Part VIIIAA or Part VIIIB of the Family Law Act 1975.
Commutation of non-compliant self managed superannuation or small APRA fund 100% asset-test exempt income streams

In recognition of the global financial crisis of 2008 and 2009, temporary relief has been provided for holders of 100% asset-test exempt income streams, sourced from a SMSF or SAF, who are forced to restructure after failing to meet the high probability test.    

More [71]

 

Security for borrowing

For an income stream to be asset-test exempt, neither of the following can be used as security for borrowing:

  • the capital value of the income stream, nor
  • the income from the income stream.
Transfer to a reversionary beneficiary

In order for a life expectancy income stream to qualify for asset-test exempt status, the contract or governing rules [2] must specify that the income stream can only be transferred to a reversionary beneficiary or to the person's estate on the death of the primary beneficiary. To ensure that no income [2] is deferred, the payment to a reversionary beneficiary cannot be greater than the payment the primary beneficiary received immediately before death.

Re-testing of reversionary income streams purchased before 20 September 2004

If the primary beneficiary or owner of a:

  • life expectancy, or
  • 15 year minimum term asset-test exempt income stream

dies and the income stream reverts to the nominated reversionary beneficiary, the income stream must be re-tested for asset-test exempt status as at the date of reversion using the age and life expectancy of the reversionary beneficiary and remaining term of the income stream on that date.

If, on the date of reversion:

  • the reversionary beneficiary had not attained pension age, or
  • the remaining term of the income stream did not meet the term requirements for a life expectancy or 15 year minimum term income stream purchased before 20 September 2004,

the income stream would no longer meet the characteristics of an asset-test exempt income stream and would instead be assessed as an asset-tested income stream (long term) [2]. The income stream retains the same commencement day, purchase price and relevant number regardless of whether it is assessed as asset-test exempt or as asset-tested. The gross payment may reduce as specified in the income stream contract.    

More [72]

 

Re-testing of reversionary income streams purchased on or after 20 September 2004

The income stream continues to be asset-test exempt if the reversionary beneficiary was the partner of the primary beneficiary on the day of the primary beneficiary's death. In all other cases, the income stream ceases to be asset-test exempt on reversion. In any case, the income stream retains the same commencement day, purchase price and relevant number. The gross payment may reduce as specified in the income stream contract.

Period of payments to reversionary beneficiary

The reversionary benefit for life expectancy income streams is the balance of payments that would have been paid to the primary beneficiary under the contract terms.

Removal or change of reversionary beneficiary

Removing or changing the reversionary beneficiary has no impact on the asset test exempt status of the income stream.


 

Veterans' Entitlements Act 1986 [50] Section 5JB

VEA → (go back) [73]

 

 

10.5.3/Determining what Proportion of an Asset Test Exempt Income Stream is Exempt [60]

 

More ? (go back) [74]

 

Actuarial Certificate

10.5.5/Additional Documentation Required from Self managed Superannuation Funds and Small APRA Funds [27]

 

More ? (go back) [75]

 

Relevant number

Section 10.5.7 Life Expectancy Tables, Pension Valuation Factors and Payment Factors [48]

 

More ? (go back) [76]

 

Waiver of debt under temporary debt relief arrangements

10.5.5/Assessment where Fund Closes or is in Financial Difficulty [64]

 

More ? (go back) [77]

 

Asset-tested income streams

10.5.2/Asset tested income streams [78]

 

Determining the relevant number for an assets test exempt life expectancy or 15 year minimum term income stream

Section 10.5.7 Life Expectancy Tables, Pension Valuation Factors and Payment Factors [48]

 

More ? (go back) [79]

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

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

 

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

The consumer price index (CPI) provides the official measure of inflation in Australia. The CPI measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group (i.e. metropolitan households).

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

The residual capital value is the amount (if any) remaining at the end of an income stream's term, consisting of a portion of the initial capital invested in the income stream [2].

 

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

Superannuation contributions surcharge has the meaning that it has in the Superannuation Contributions Tax (Assessment and Collection) Act 1997.

A person may apply to the Commission in writing to be allowed to commute the whole or part of an income stream because of extreme financial hardship. According to s.5JA of the VEA, the Commission may determine an amount as allowable commutation if these conditions are satisfied:

  •       the person's circumstances are exceptional and could not be reasonably foreseen at the time the person purchased the income stream, and
  •       the person has insufficient liquid assets or other assets (excluding the person's principal home) that could be realised to avoid the extreme financial hardship, and
  •       that amount is required to meet unavoidable expenditure.

The governing rules of an income stream are either:

  • a trust instrument,
  • other document or legislation, or
  • combination of them,

governing the establishment and operation of the income stream.

According to section 5H of the VEA [9] income is:

  • an amount earned, derived or received by a person for the person's own use or benefit;
  • a periodical payment by way of gift or allowance; or
  • a periodical benefit by way of gift or allowance.

 

 

An income stream is an asset-tested long term income stream if it is:

  • not an asset-test exempt income stream [2];
  • 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

Asset-Test Exempt Income Streams - Market Linked

  • Log in [80] to post comments
Last amended 
Thursday, January 8, 2015

VEA [81]

 

Section 5JBA [54] VEA

 

VEA ? (go back) [82]
Purchase date

To be an asset-test exempt income stream [2], a market linked income stream must have been purchased before 20 September 2007, unless certain conditions are met.     

More [83]

 

General characteristics of asset-test exempt market linked income streams

An asset-test exempt market linked income stream has all of the following characteristics:

  • the commencement day [2] is on or after 20 September 2004
  • the income stream [2] is provided to the primary beneficiary, or the primary beneficiary's reversionary partner on the date of the primary beneficiary's death
  • on reversion, the reversionary component cannot be greater than the account balance immediately prior to reversion
  • the income stream is payable for a fixed term in whole years based on life expectancy [2]
  • the payments under the income stream are made at least annually and are calculated under the legislated formula
  • the first payment under the income stream relates to the period commencing on the date of purchase of the income stream
  • the income stream has no residual capital value [2]
  • the income stream has limited commutability
  • on commutation [2], the amount commuted cannot be greater than the account balance immediately prior to the commutation
  • the income stream cannot be used as security for borrowing.
Commencement day

An asset-test exempt market linked income stream's commencement day is the first day of the period to which the first payment relates, even if the payment is made at the end of a twelve month period. The commencement day is usually the day the income stream was purchased.

Term and relevant number of an asset-test exempt market linked income stream

The term of the income stream is a fixed term specified in the income stream contract and is also known as its relevant number [2]. To comply as an asset-test exempt income stream the relevant number must meet the criteria in the table below. The relevant number is always calculated using the person's age on the income stream's commencement day, which is the same date as the purchase day.     

More [84]

 

 

Purchase date of income stream

Relevant number requirements

Rounding

On or after 20/09/2004 and before 01/01/2006

  • at least as long as the primary beneficiary's life expectancy and at most as long as the primary beneficiary's life expectancy as if they were five years younger, or
  • at least as long as the greater of the life expectancy of:
  • the primary beneficiary, and
  • the primary beneficiary's reversionary partner, and
  • at most as long as the greater of the life expectancy of:
  • the primary beneficiary as if they were five years younger, and
  • the primary beneficiary's reversionary partner as if they were five years younger.

If not a whole number, must be rounded up to the next whole number.

On or after 01/01/2006

  • at least as long as the primary beneficiary's life expectancy and at most as long as the greater of:
  • the primary beneficiary's life expectancy as if they were five years younger, and
  • the period starting on the commencement day and ending on the day on which the primary beneficiary would turn 100, or
  • at least as long as the greater of the life expectancy of:
  • the primary beneficiary, and
  • the primary beneficiary's reversionary partner, and
  • at most as long as the greatest of:
  • the life expectancy of the primary beneficiary as if they were five years younger,
  • the life expectancy of the primary beneficiary's reversionary partner as if they were five years younger,
  • the period starting on the commencement day and ending on the day on which the primary beneficiary would turn 100, or
  • the period starting on the commencement day and ending on the day on which the primary beneficiary's reversionary partner would turn 100.

If not a whole number, must be rounded up to the next whole number.

Range of payments for a market linked income stream

The annual payment is calculated on the commencement day of the income stream and on 1 July each year. The annual payment made under the income stream for a financial year [2] must be at least 90% and not more than 110% of the default annual payment worked out by the formula:

 

                  Default annual payment = Account balance / payment factor

 

For the purposes of the formula:

  • the account balance is the balance at the start of the financial year, or if the income stream commenced during the financial year, the balance at the commencement day,
  • the payment factor is a factor worked under principles determined by the Commission, and    More [85]
  • the default annual payment must be rounded to the nearest $10.00, rounding amounts ending in $5.00 up.
Rules determining the choice of payment factor

The payment factor used in calculating the annual payment depends on the remaining term of the income stream. The remaining term of the income stream is rounded using the following rules:

  • for income streams commencing between 1 July and 31 December, the remaining term of the income stream is rounded down to the next whole number
  • for income streams commencing between 1 January and 30 June, the remaining term of the income stream is rounded up to the next whole number
  • if the remaining term rounds to zero, a payment factor of one is used.
Other rules for payments from a market linked income stream
 

If

then

the income stream commences or is fully commuted midway through the financial year

the annual payment under the income stream must be reduced on a pro-rata basis, however, the assessable income is the annualised amount

the income stream is partly commuted midway through the financial year

the annual payment, and therefore the assessable income, does not change for that financial year

the income stream commences in June

payments under the income stream need not commence until the following 1 July

the amount worked out under the formula exceeds the income stream balance on that day

the amount payable for the period is the balance of the income stream

the balance of the income stream at the end of the term is greater than $0

the balance must be paid out within 28 days of the end of the term

Temporary reduction in minimum payments

For the period commencing on 1 July 2008 and ending 30 June 2013, temporary relief measures were applied by the Government in response to the Global Financial Crisis to allow all account-based income stream recipients to elect to reduce their minimum annual payment to :

  • 50% of the required minimum payment for the period commencing 1 July 2008 and ending 30 June 2011; and
  • 75% of the required minimum payment for the period commencing 1 July 2011 and ending 30 June 2013.

These temporary relief measures ceased to apply from 1 July 2013.

Temporary relief was again applied over the period 1 July 2019 to 30 June 2022 in response to the Coronavirus pandemic.  Income stream recipients were able to elect to reduce their minimum annual payment to 50%  of the required minimum payment for the periodcommencing 1 July 2019 to 30 June 2022.

Purchase price and residual capital value

The purchase price is the amount invested to purchase the income stream, less any allowable commutations. The income stream must have no residual capital value.

Income stream is non-commutable

In order to be assessed as asset-test exempt, the income stream must be non-commutable except in limited circumstances. The benefit payable after the commutation cannot be greater than the benefit payable before the commutation. Commutation is allowed in the following circumstances:

  • on death of the primary beneficiary where there is no reversionary partner,
  • where the income stream is paid to the reversionary partner following the death of the primary beneficiary, on death of the reversionary partner,
  • if the income stream is not a commutation funded income stream, within six months of the commencement day,
  • where the commutation is transferred directly to the purchase of a new income stream with the characteristics of an asset-test exempt income stream,
  • to the amount necessary to pay a superannuation contributions surcharge [2] amount,
  • to the amount necessary to pay a hardship amount [2],
  • to the amount necessary to pay the person's spouse or former spouse in a payment split under Part VIIIB of the Family Law Act 1975.
Security for borrowing

For an income stream to be asset-test exempt, neither of the following can be used as security for borrowing:

  • the capital value of the income stream, nor
  • the income from the income stream.
Re-testing of reversionary income streams

The income stream continues to be asset-test exempt if the reversionary beneficiary was the partner of the primary beneficiary on the day of the primary beneficiary's death. In all other cases, the income stream ceases to be asset-test exempt on reversion. In any case, the income stream retains the same commencement day, gross payment, purchase price and relevant number as the original income stream.

Period of payments to reversionary beneficiary

Payments will be made to the reversionary beneficiary for the remainder of the contract term. To ensure that no income [2] is deferred, the reversionary benefit cannot be greater than the payment the account balance immediately before reversion.


 

 

Section 5JBA [54] VEA

 

VEA ? (go back) [82]

 

10.5.3/Determining what Proportion of an Asset-Test Exempt Income Stream is Exempt [60]

 

More ? (go back) [86]

 

Relevant number

Section 10.5.7 Life Expectancy Tables, Pension Valuation Factors and Payment Factors [48]

 

More ? (go back) [87]

 

Legislation Library – Income Support – Income Streams

Veterans' Entitlements (Asset-test Exempt Income Stream (Market-linked) – Payment Factors) Principles 2005 [88]

 

More ? (go back) [89]

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

The residual capital value is the amount (if any) remaining at the end of an income stream's term, consisting of a portion of the initial capital invested in the income stream [2].

 

 

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Financial year, in relation to a company, means:

  • a period of 12 months beginning on 1 July, or
  • if some other period is the company's tax year that other period.

 

 

Superannuation contributions surcharge has the meaning that it has in the Superannuation Contributions Tax (Assessment and Collection) Act 1997.

A person may apply to the Commission in writing to be allowed to commute the whole or part of an income stream because of extreme financial hardship. According to s.5JA of the VEA, the Commission may determine an amount as allowable commutation if these conditions are satisfied:

  •       the person's circumstances are exceptional and could not be reasonably foreseen at the time the person purchased the income stream, and
  •       the person has insufficient liquid assets or other assets (excluding the person's principal home) that could be realised to avoid the extreme financial hardship, and
  •       that amount is required to meet unavoidable expenditure.

According to section 5H of the VEA [9] income is:

  • an amount earned, derived or received by a person for the person's own use or benefit;
  • a periodical payment by way of gift or allowance; or
  • a periodical benefit by way of gift or allowance.

 

 

Asset-Test Exempt Income Streams - Defined Benefit

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Last amended 
Thursday, January 8, 2015

VEA [91]

 

Section 5J(1E) [54] VEA

 

VEA ? (go back) [92]
General characteristics of defined benefit income streams

A defined benefit income stream [2] is an income stream that:

  • meets the definition of 'pension' as specified in the Superannuation Industry (Supervision) (SIS) Regulations 1994,
  • is paid from a public sector or private sector defined benefit superannuation fund [2],
  • determines the payment rate by factors other than the purchase price [2], such as the length of service and final salary.
Conditions for exemption to be extended

All of the following conditions must be met for a defined benefit income stream to be asset-test exempt:

  • the scheme or fund from which the income stream is paid:
  • was established before 20 September 1998, and
  • provided the income stream product before that date,
  • the income stream product was treated as a superannuation pension [2] and was exempt from the assets test [2] before 20 September 1998,
  • a pensioner started the income stream:
  • before 20 September 1998, or
  • after 20 September 1998 from a pre-20 September 1998 defined benefit superannuation pension product,
  • for a private sector scheme or fund, unless the pensioner is a reversionary beneficiary:
  • the income stream is directly connected to the pensioner's previous employment, and
  • the payments from the defined benefit income stream become payable to, or for, the pensioner because of that employment.
Term and relevant number of a defined benefit income stream

Although the term of a defined benefit income stream is for the life of the beneficiary, the relevant number [2] is either the:

  • life expectancy [2] of the primary beneficiary (ie where there is no nominated reversionary beneficiary), or
  • longest life expectancy of either the primary beneficiary or reversionary beneficiary (ie where there is a nominated reversionary beneficiary or where the income stream is purchased in joint names).

When determining the relevant number the actual life expectancy factors are used (ie there is no rounding).

Reversion to reversionary beneficiary

Defined benefit income streams continue to be asset-test exempt on reversion to a reversionary beneficiary. On reversion, the gross payment, deductible amount [2] and the deductible amount calculation method may change.

 


 

 

Section 5J(1E) [54] VEA

 

VEA ? (go back) [92]

A defined benefit income stream is an income stream [2]  where the payments are not fully determined by a purchase price [2]. Instead, payments are made with reference to a set formula based on:

  • the person's salary before retirement,
  • years of service, and/or
  • the governing rules [2]of the income stream.

 

 

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 [93]):
  • 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.

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

A superannuation pension is a periodical payment received by a retiree from superannuation fund. During a person's working life, an individual may make regular contributions to superannuation fund in order to secure financial security after retirement. After retirement the superannuation may be collected as a:

  • pension;
  • lump sum; or
  • combination of both.

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their assets increase above a certain threshold known as the assets value limit (AVL). [94]

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

According to section 5J of the VEA [8], a deductible amount, in relation to an income stream, means the sum of the amounts that are the tax free component [2], worked out under the tax law, of the payments received from the DBIS [2].

 

 

Asset-Tested Income Streams

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Last amended 
Monday, July 1, 2019

VEA [96]

Section 5J [50] VEA

 

VEA ? (go back) [97]
Asset-tested income streams (long term)

An asset-tested income stream (long term) [2] is an income stream [2] that:

  • was purchased on or after 20 September 2007, or
  • was purchased before 20 September 2007 and does not meet all the characteristics of an asset test exempt income stream [2].

An asset-tested income stream (long term) is an income stream wher ethe specified term of the contract is:

  • more than five years, or
  • five years or less provided the term is equal to or greater than the owner's life expectancy [2].

If the income stream was purchased before 20 September 2007 and doesn not meet all the characteristics of an asset-test exempt income stream, it is an asset-tested income stream (long term).

Income streams that are paid for the life of the owner and were purchased on or after 1 July 2019 are classified as asset-tested income streams (lifetime).

 
Term and relevant number of an asset-tested income stream (long term)

The term of an asset-tested income stream (long term) is also known as its relevant number [2]. For an asset-tested income stream (long term) paid for a fixed term, the relevant number is the fixed term that the income stream is payable for as specified in the contract. For asset-tested income streams (long term) paid for life and for all allocated income streams, the relevant number is either:

  • the life expectancy of the primary beneficiary (that is, where there is no nominated reversionary beneficiary), or
  • the longest life expectancy of either the primary beneficiary or reversionary beneficiary (ie where there is a nominated reversionary beneficiary or where the income stream is purchased in joint  names).    More [98]

When determining the relevant number, the actual life expectancy factors are used (that is, there is no rounding). If there is a guaranteed period [2], the relevant number will be based on the life expectancy, not the guaranteed period.

Asset-tested income streams (long term deemed)

An account-based income stream, also known as an allocated pension or transition to retirement pension, is an asset-tested (long term deemed) income stream and is treated as a financial asset and deemed if either:

  • the income stream commenced on or after 1 January 2015; or
  • the income stream commenced before 1 January 2015 and the owner has not been in continuous receipt of an income support payment since 31 December 2014.

Under grandfathering provisions, an account-based income stream is not an asset-tested (long term deemed) income stream, and will continue to be assessed as an asset-tested (long term) income stream, if it:

  • commenced before 1 January 2015, and
  • was assessed after 1 January 2015 as an asset-tested (long term) income stream, and
  • reverted to a reversionary beneficiary under the income stream contract following the death of the original owner, and
  • the reversionary beneficiary has been continuously in receipt of an income support payment since the reversion of the income stream.

Under grandfathering provisions, an account-based income stream is not an asset-tested (long term deemed) income stream, and will continue to be assessed as an asset-tested (long term) income stream, if it:

  • was assessed as an asset-tested (long term) income stream, and
  • was commuted on or after 1 January 2015 as part of a divorce/separation settlement (a court order under Part VIIIAA or Part VIIIB of the Family Law Act 1975), and
  • a new account-based income stream was purchased by direct rollover of the proceeds, and
  • the owner has been continuously in receipt of an income support payment since the commencement of the new income stream.
Asset-tested income streams (lifetime)

An asset-tested lifetime income stream is an income stream that:

  • was purchased on or after 1 July 2019,
  • once regular payments commence, the payments continue for the rest of the owner's life,
  • the amounts paid are based on the age, life expectancy or other factors relevant to the mortality of the owner, and
  • does not have the characteristics of an asset-test exempt income stream or a defined benefits scheme.

More: 10.5.2 Asset-tested Income Streams - Lifetime and 10.5.4 Income and Assets Assessment of Income Streams.

VEA: section 5JE.

Asset-tested income streams (short term)

An income stream is classified as an asset tested income stream (short term) [2], when the term is five years or less and it is not an:

  • asset-test exempt income stream,
  • asset-tested income stream (long term), or
  • asset-tested income stream (lifetime).    More [99]
Certain income streams purchased on or after 20 September 2007 may be asset-test exempt

Most income streams purchased on or after 20 September 2007 are asset-tested income streams.  There are some exceptions for income streams purchased from the commutation of an asset-test exempt income stream, if certain conditions are met.   

More [100]

Section 5J [50] VEA

 

VEA ? (go back) [97]

 

Relevant number

Section 10.5.7 Life Expectancy Tables, Pension Valuation Factors and Payment Factors [48]

 

More ? (go back) [101]

 

Assessment of assets-tested income streams short term

Chapter 9.5 Deeming Provisions [5]

 

More ? (go back) [102]

 

10.5.3/Determining what Proportion of an Asset-Test Exempt Income Stream is Exempt [60]

 

More ? (go back) [103]

10.5.3/Determining what Proportion of an Asset-Test Exempt Income Stream is Exempt [60]

 

More ? (go back) [103]

An income stream is an asset-tested long term income stream if it is:

  • not an asset-test exempt income stream [2];
  • 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

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

A guaranteed period ensures that the pension payments will continue to the estate should the owner and the reversionary beneficiary die during the guaranteed period.

An income stream is an asset-tested short term income stream if the term of the income stream is five years or less and it is not any of the following:

  • an asset-test exempt income stream [2];
  • an asset-tested income stream (long term); or
  • an asset-tested income stream (lifetime).

Legislation: subsection 5J(1) Veterans' Entitlements Act 1986

 

 

Asset-tested Income Streams - Lifetime

Last amended 
Monday, July 1, 2019

Asset-tested income stream (lifetime)

Asset-tested income streams (lifetime) are income streams where:

  • the income stream was purchased or acquired on or after 1 July 2019;
  • the income stream ensures that, once the income stream starts paying income, it continues to pay for the remainder of the product owner’s life; and
  • the amount of payment made by the income stream considers the age, life expectancy or other factors relevant to the mortality of the product owner.

Note: lifetime income streams purchased before 1 July 2019 are assessed as asset‑tested income streams (long term) or could be asset-test exempt if purchased before 20 September 2007.

The table below gives an overview of the assets and income test treatment of different types of asset-tested income streams (lifetime). A full outline can be found at 10.5.4 Means Test Assessment of Asset-Tested Income Streams (lifetime).

Type

Assets test

Income test

Purchased with superannuation monies

BEFORE the assessment day,
there is no assessable asset value.

ON OR AFTER the assessment day, and UP TO AND INCLUDING the threshold day,
60 per cent of the purchase amount is assessed as an asset.

AFTER the threshold day,
30 per cent of the purchase amount is assessed as an asset.

Asset value may be higher if the income stream has a high surrender value or death benefit.

BEFORE the assessment day, there is no assessable income.

ON OR AFTER the assessment day,
60 per cent of the annual payment is assessed as income.

Purchased with non-superannuation monies

BEFORE the assessment day
100 per cent of the purchase amount is assessed as an asset.

ON OR AFTER the assessment day, and UP TO AND INCLUDING the threshold day,
60 per cent of the purchase amount is assessed as an asset.

AFTER the threshold day,
30 per cent of the purchase amount is assessed as an asset.

Asset value may be higher if the income stream has a high surrender value or death benefit.

BEFORE the assessment day, the purchase amount is deemed using the deeming rates (see 9.5)

ON OR AFTER the assessment day,
60 per cent of the annual payment is assessed as income.

VEA: section 5JE;
subsection 46YB Income – asset-tested income stream (lifetime);
section 52BAA Value of asset-tested income streams (lifetime) that are managed investments;
section 52BAB Value of asset-tested income streams (lifetime) that are not managed investments.

More: 10.5.4 Means Test Assessment of Asset-tested Income Streams (lifetime)

 

 

 

Family Law Affected Income Streams

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Last amended: 10 March 2011

    

VEA ? [105]

What is a Family Law Affected income stream?

Any income stream [2], whether asset test exempt or asset tested, may become a [glossary:Family Law Affected (FLA):] income stream [2]. An income stream becomes an FLA income stream when the primary beneficiary's former partner [2] becomes entitled to be paid some or all of the income stream under:

  • a payment split under Part VIIIB of the Family Law Act 1975; or
  • an order under Part VIIIAA of the Family Law Act 1975.
Deprivation rules not to apply to splits under the Family Law Act 1975

The deprivation rules do not apply to the disposal of the whole or a part of a superannuation interest pursuant to an order under Part VIIB or VIIIAA of the Family Law Act 1975.

Assessment of family law affected income streams

Assessment of an FLA income stream depends on the type of income stream involved.      

More ? [106]


Section 5JC [54] VEA

VEA ? (go back) [107]

Section 10.5.6 Special Provisions Regarding Family Law Affected Income Streams [32]

More ? (go back) [108]

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

A person's 'partner' is someone who is a member of a couple with that person.

10.5.3 General Provisions for Assessing Income Streams

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This section contains general information about the assessment of income streams.


Additional Rules Regarding Commutation

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Last amended: 13 May 2008

VEA ? [111]

Partial commutation of a purchased income stream

When a partial commutation [2] is made from a purchased income stream the:

  • relevant number [2] does not change for income support purposes,
  • purchase price [2] is reduced by the actual amount/s commuted,     More ? [112]
  • residual capital value [2] may need to be reduced, information must be sought to determine whether an adjustment to this value is also necessary,
  • asset value is adjusted, as the new asset value is calculated using the adjusted purchase price and adjusted residual capital value,
  • gross income may need to be reduced, information must be sought to determine whether an adjustment to the income stream payments is also necessary, and
  • deduction is reduced, as the deduction is calculated using the adjusted purchase price and adjusted residual capital value.
Partial commutation of a defined benefit income stream

The assessable income must be reviewed when a partial commutation is made from a defined benefit income stream [2] as the:

  • gross income,
  • deductible amount [2] and
  • method under which the deductible amount is calculated

may all change as a result of a partial commutation.

If the deductible amount was calculated under the saving provision immediately before the commutation, the saving provision will continue to apply, however the deductible amount may be recalculated.   

More ? [113]

Three strike policy on commutation of an asset test exempt income stream

VEA ? [114]

Pensioners may commute a non-commutation funded asset test exempt income stream [2] within six months of the commencement day [2] of the income stream. They can use this provision at least twice within the first 6 months for one or more income streams after they first receive an income support pension [2] without the income stream losing asset test exempt status. On the third commutation, the Commission may determine that any further income streams owned by the person do not qualify for asset test exemption.

Transfer of funds from one asset test exempt income stream to another

A transfer of all the funds in one asset test exempt income stream directly to the purchase of another asset test exempt income stream is not a commutation for the purposes of the three strikes policy. A commutation does occur, when part, or all, of the funds in an asset test exempt product are accessed or not directly transferred to the purchase of another asset test exempt product.

Retrospective reclassification of an asset test exempt income stream following commutation

    

VEA ? [115]

If a person commutes (in whole or in part) an asset test exempt income stream contrary to the contract or governing rules [2] as specified under subsection 5JA(2), 5JB(2) or 5JBA(2), section 52ZMA will be applied to retrospectively reclassify the commuted income stream as an asset tested income stream (long term) [2] from later of the:

  1. day five years before the day the income stream was commuted, or
  2. commencement day of the income stream (or if the income stream is part of a succession of asset test exempt income streams, the commencement day of the first asset test exempt income stream in the succession of asset test exempt income streams), or 
  3. date income support pension was granted (ie. SP/ISS/Centrelink pension), or
  4. 20 September 2001 (the date section 52ZMA took effect).

Retrospectively reclassifying the income stream as an asset tested income stream (long term) has the effect of including the assessable asset value of the income stream in the pension assessment for the relevant period, with provision for asset depletion under subsection 52A(4).

Debt arising from retrospective reclassification

Retrospective reclassification of an asset test exempt income stream to an asset tested income stream may result in an overpayment. The overpaid amount must be recovered under existing policy.     

More ? [116]

Debts not raised for commutation of asset test exempt defined benefit income stream

    

VEA ? [117]

Section 52ZMA [54] of the VEA provides for the calculation of a debt if an overpayment arises following the commutation of an asset test exempt income stream in contravention to the contract or governing rules under which the income stream was provided. However, subsection 52ZMA(11) provides that section 52ZMA is not applicable to income streams where a determination under subsection 5JA(5), 5JB(4), or 5JBA(11) is in force. As there is a Commission determination under subsection 5JA(5) for all existing defined benefit income streams, section 52ZMA cannot be applied when a defined benefit income stream is commuted.


Section 5JA(2) (h) [54] VEA - Commuting assets test exempt income streams lifetime

Section 5JB(2) (h) [54] VEA - Commuting other assets test exempt income streams

VEA ? (go back) [118]

Asset assessment of an income stream after a partial commutation

10.5.4/Assets Assessment of Defined Benefit and Purchased Income Streams [119]

More ? (go back) [120]

Section 10.5.4 Income and Assets Assessment of Income Streams [46]

More ? (go back) [121]

Section 5JA(4) [54] VEA - three strike policy on assets test exempt income stream commutations – income streams payable for life

Section 5JB(3) [54] VEA - three strike policy on assets test exempt income stream commutations – income streams payable for life expectancy or 15 year minimum

Section 5JBA(10)

VEA ? (go back) [122]

Section 52ZMA [54] VEA – Debt resulting from commutation of asset-test exempt income stream contrary to subsection 5JA(2), 5JB(2) or 5JBA(2)

VEA ? (go back) [123]

Reference Library

Overpayment Management Manual - Chapter 7 [124]

More ? (go back) [125]

Section 52ZMA(11) [54] VEA – Section 52ZMA does not apply if a 5JA(5) [54] or 5JB(4) [54] determination is in force

VEA ? (go back) [126]

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

The residual capital value is the amount (if any) remaining at the end of an income stream's term, consisting of a portion of the initial capital invested in the income stream [2].

 

 

A defined benefit income stream is an income stream [2]  where the payments are not fully determined by a purchase price [2]. Instead, payments are made with reference to a set formula based on:

  • the person's salary before retirement,
  • years of service, and/or
  • the governing rules [2]of the income stream.

 

 

According to section 5J of the VEA [8], a deductible amount, in relation to an income stream, means the sum of the amounts that are the tax free component [2], worked out under the tax law, of the payments received from the DBIS [2].

 

 

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

Income support pension is:

  • a social security pension [2]
  • a service pension;
  • an income support supplement.

 

 

The governing rules of an income stream are either:

  • a trust instrument,
  • other document or legislation, or
  • combination of them,

governing the establishment and operation of the income stream.

An income stream is an asset-tested long term income stream if it is:

  • not an asset-test exempt income stream [2];
  • 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

Exemptions from the Income Stream Provisions

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Last amended: 23 March 2010

No saving provisions for income stream provisions

The income stream [2] provisions have no general saving provisions. This means that all income streams are assessable under the current legislation unless an exemption has been granted.

Conditions for gaining an exemption

    

VEA ? [128]

The Minister has the power to exempt a pensioner from the current income stream assessment rules if the pensioner:

  • has entered into a binding arrangement for an income stream before 13 May 1997,
  • has continuously been [glossary:receiving a:] service pension [2], income support supplement [2], or a social security payment [2] since 19 September 1998 up to the date when a claim for exemption was lodged, and
  • would, in the Minister's opinion, be financially significantly disadvantaged by the application of the current rules.
What is a binding arrangement?

A decision on whether a person has entered into a binding arrangement is determined by a delegate of the Commission. Only if a case satisfies this criterion should consideration be given to seeking a ministerial opinion in respect of significant disadvantage. A binding arrangement exists if the product:

  • cannot be commuted, or have its terms of contract altered to qualify for asset test exemption, or
  • cannot be commuted without causing the pensioner severe detriment (severe detriment is determined by assessing the cost of exiting the product in relation to the pensioner's specific financial circumstances). Cases involving severe detriment should be referred to the Benefits, Payments and Rehabilitation Policy team in the Canberra office.      More ? [129]
Application of exemption

The exemption from assessment of an income stream applies to individual income streams held by individual pensioners. If a pensioner has multiple products, then each product held by that pensioner will need to be considered separately against the exemption criteria. Granting an exemption to an individual pensioner in respect of an income stream product is not a precedent to granting an exemption to other pensioners with the same product. As most products affected by the 20 September 1998 amending changes can be commuted, and contracts can generally be renegotiated with the agreement of the parties involved, it is expected that few pensioners will meet the criteria for a binding arrangement.

Acceptance of request for exemption

A request for exemption will generally be granted on the grounds of significant disadvantage if the assessment under the new rules reduces the person's total income to below the maximum rate of pension/allowance plus the income free area [2] under the income test [2]. Effectively, significant disadvantage exists where:

(New rate of pension + other income) is less than the (maximum rate of pension + income free area).

Continuation of exemption

A pensioner must have been in continuous receipt of an income support payment since 19 September 1998 to continue to have the benefit of an exemption. Transfer from one payment to another is acceptable, but if an income support pension ceases to be payable for a period, and pension is reinstated at a future date, the exemption is lost unless the Minister makes a new written declaration that the person's income stream be exempt from assessment under the current rules.


SCH5-11A [88] VEA – Amendments relating to treatment of income streams

VEA ? (go back) [130]

Email to

Policy Advisings Income Support [131]

More ? (go back) [132]

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

A service pension is an income support payment broadly equivalent to the social security age and disability support pensions. It may be paid once a veteran or partner has reached the nominated age or is incapacitated for work.

ISS is an income support payment that may be paid to eligible war widows and widowers under the VEA and persons receiving wholly dependent partners' compensation under the MRCA, and who satisfy the means tests. It is an indexed rate, increased twice-yearly in March and September in line with changes to the cost of living and/or average wages. Income Support Supplement (ISS) legislation commenced on 20 March 1995. It is a payment created to replace the ceiling rate income support age, carer, wife and disability support pensions, paid to war widows/widowers by Centrelink.

 

 

A Social Security payment refers to the following:

  • a social security pension [2]
  • a social security benefit [2];
  • an allowance under the Social Security Act 1991;
  • family allowance;
  • family tax payment; and
  • any other kind of payment under Chapter 2 of the Social Security Act 1991.

 

 

 

The income free area is the amount of income that an income support pensioner may receive without suffering any reduction in pension under the income test.

One element of the means test [2] for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their income increases above a certain threshold known as the income free area (IFA) [2].

 

 

Determining what Proportion of an Asset Test Exempt Income Stream is Exempt

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Last amended 
Thursday, March 31, 2022

 

Defined benefit income streams are 100% asset test exempt

    

VEA ? [134]

 

The Commission has made several determinations in the form of legislative instruments that regardless of its commencement day [2], a defined benefit income stream [2] is 100% asset test exempt.

Asset test exempt income streams commencing before 20 September 2004 are 100% asset test exempt

    

VEA ? [135]

 

An asset test exempt income stream [2] commencing before 20 September 2004 is 100% asset test exempt.

Asset test exempt income streams commencing on or after 20 September 2004 and before 20 September 2007 are generally 50% exempt

    

VEA ? [136]

 

Most asset test exempt income streams commencing on or after 20 September 2004 and before 20 September 2007 are 50% asset test exempt. However, principles have been developed allowing the Commission to determine that certain asset test exempt income streams commencing on or after 20 September 2004 and before 20 September 2007 are 100% asset test exempt. The income stream must:

  • have been purchased using funds directly from an allowable commutation [2] of an existing asset test exempt income stream, and
  • have the characteristics of an asset test exempt income stream, and
  • meet one of the criteria in clauses 2.2 to 2.10 of the principles.    More ? [137]
Income streams commencing on or after 20 September 2007 are generally not asset test exempt

Most income streams commencing on or after 20 September 2007 are not asset test exempt. However, principles have been developed allowing the Commission to determine that certain income streams commencing on or after 20 September 2007 are either  50% or 100% asset test exempt. The income stream must:

  • have been purchased using funds directly from an allowable commutation of an existing asset test exempt income stream,
  • have the characteristics of an asset test exempt income stream, and
  • meet one of the criteria in clauses 3.2 to 3.11 of the principles.    More ? [138]

The level of asset test exemption (50% or 100%) will be the same as the asset test exemption applicable to the existing asset test exempt income stream.

Principles under which a new income stream can be asset test exempt

In general terms, the Principles under which a new income stream can retain its asset test exemption are limited to commutations made to enable:

  • changes to be made to the income stream where either:
  • the reversionary beneficiary predeceases the primary beneficiary, or
  • the primary beneficiary and the reversionary beneficiary are no longer members of a couple,
  • compliance with actuarial certification,
  • a transfer to a successor fund,
  • a payment split under Part VIIIB of the Family Law Act 1975,
  • a Family Court order or injunction under Part VIIIAA of the Family Law Act 1975,
  • payment of a superannuation contributions surcharge [2] debt,
  • payment of excess contributions tax,
  • payment of a hardship amount [2],
  • transfer of all assets supporting a market linked income stream to another market linked income stream,
  • closure of a self managed superannuation fund,
  • compliance with regulation 6.21 of the Superannuation Industry (Supervision) Regulations 1994, or
  • payment of excess contributions tax.

The original income stream must be commuted in full, in one complete transaction, and the commuted amount rolled over to the new income stream, except for commutations made in relation to payment splits under the Family Law Act, or payment of a superannuation contributions surcharge debt, excess contributions tax or hardship amount, which can be partial commutations.  A partial commutation based on a partial transfer of assets cannot be recognised, outside of the limited allowed circumstances, including in those cases where the transfer of the remaining asset value has been delayed.

Full details of each allowable commutation event are outlined in the Veterans' Entitlements (Retention of Exemption for Asset-test Exempt Income Streams) Principles 2022 (legislation.gov.au) [139]

 

 

 


 

 

Legislation library\Income Support\Income Streams\1999/6 – Lifetime Income Stream [88]

Legislation library\Income Support\Income Streams\1999/5 – Lifetime Income Stream Guidelines [88]

Legislation library\Income Support\Income Streams\1998/12 – Lifetime Income Stream [88]

Legislation library\Income Support\Income Streams\1998/11 – Lifetime Income Stream [88]

Legislation library\Income Support\Income Streams\1998/10 – Lifetime Income Stream Guidelines [88]

 

VEA ? (go back) [140]

 

Section 52(1) (d) [54] VEA

 

VEA ? (go back) [141]

 

Section 52(1) (daa) [54] VEA

 

VEA ? (go back) [142]

 

Legislation Library – Principles for determining whether an income stream is asset test exempt

Income streams - VE-PRINCIPLES/2011-Retention of Exemption for Asset-test Exempt Income Streams [88]

 

More ? (go back) [143]

 

Legislation Library – Principles for determining whether an income stream is asset test exempt

Income streams - VE-PRINCIPLES/2011-Retention of Exemption for Asset-test Exempt Income Streams [88]

 

More ? (go back) [144]

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

A defined benefit income stream is an income stream [2]  where the payments are not fully determined by a purchase price [2]. Instead, payments are made with reference to a set formula based on:

  • the person's salary before retirement,
  • years of service, and/or
  • the governing rules [2]of the income stream.

 

 

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

Superannuation contributions surcharge has the meaning that it has in the Superannuation Contributions Tax (Assessment and Collection) Act 1997.

A person may apply to the Commission in writing to be allowed to commute the whole or part of an income stream because of extreme financial hardship. According to s.5JA of the VEA, the Commission may determine an amount as allowable commutation if these conditions are satisfied:

  •       the person's circumstances are exceptional and could not be reasonably foreseen at the time the person purchased the income stream, and
  •       the person has insufficient liquid assets or other assets (excluding the person's principal home) that could be realised to avoid the extreme financial hardship, and
  •       that amount is required to meet unavoidable expenditure.

Other Rules Regarding Income Streams

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Last amended: 13 May 2016

Ongoing disability/invalidity benefits paid from a superannuation fund

Ongoing disability or invalidity benefits paid from a superannuation fund [2] are treated as defined benefit income streams [2]. The presence of an offset clause in the superannuation fund's group insurance policy does not alter the treatment of the disability/invalidity benefit as a defined benefit income stream, and does not invoke the compensation recovery provisions. However, pre-assessment payments paid by the Commonwealth Superannuation Corporation (CSC) while a person is waiting for a decision on their request to the CSC for invalidity retirement are considered to be compensation and are assessed under the compensation recovery provisions.    

More → [146]

 

Income streams paid to a trust or company

Income streams paid to a trust or company are assessed under the Trusts and Companies rules. If the ownership structure subsequently changes so that the income stream is paid to the beneficiary, this is treated as a commutation [2] and the commencement of a new income stream on that date. However, an income stream purchased by a self managed superannuation fund (SMSF) or small APRA fund (SAF) from a commercial provider and paid to the beneficiary through the SMSF or SAF is assessed under the income stream rules where the income stream is purchased in the beneficiary's name.    

More → [147]

 

Successor funds

A successor fund, in relation to a transfer of superannuation benefits of a member from one superannuation fund to another, is a fund which satisfies the following conditions:

  • the fund gives the member equivalent rights to the rights they had in the original fund in respect of the superannuation benefits, and
  • before the transfer, the trustee of the fund agreed with the trustee of the original fund that the fund will confer on the member equivalent rights to the rights that the member had under the original fund in respect of the benefits.

Where the fund is a successor fund, then the transfer of the right to an income stream continues with the same commencement day, original purchase price [2], relevant number [2] and deduction, unless the person elects to commute part of the income stream. The impact of commutation will depend on the type of income stream.

 


 

 

Asset Test Exempt Income Streams - Defined Benefit

10.5.2/Asset Test Exempt Income Streams - Defined Benefit [29]

 

Compensation recovery provisions

Chapter 9.11 [148]

 

More → (go back) [149]

 

Trusts and companies assessment rules

Chapter 10.3 [150]

 

More → (go back) [151]

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 [93]):
  • 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.

A defined benefit income stream is an income stream [2]  where the payments are not fully determined by a purchase price [2]. Instead, payments are made with reference to a set formula based on:

  • the person's salary before retirement,
  • years of service, and/or
  • the governing rules [2]of the income stream.

 

 

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

10.5.4 Income and Assets Assessment of Income Streams

  • Log in [152] to post comments

This section contains information on the income [2] and assets [2] assessment of income streams [2].


According to section 5H of the VEA [9] income is:

  • an amount earned, derived or received by a person for the person's own use or benefit;
  • a periodical payment by way of gift or allowance; or
  • a periodical benefit by way of gift or allowance.

 

 

An asset means any property, including property outside Australia.

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

Income Assessment of Defined Benefit Income Streams

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Last amended: 13 May 2008

Income assessment of defined benefit income streams

    

VEA → [154]

The following formula is used to determine the amount of annual ordinary income [2] from a defined benefit income stream [2]:

Annual ordinary income = gross annual payment [2] - deductible amount [2]

The deductible amount is a term defined in the VEA as an amount calculated under the taxation law [2], and referred to as the tax free component [2] under the taxation law. The gross annual payment excludes any abatements.

Payments for dependent children are exempt

    

VEA → [155]

If the income stream [2] contract specifies that part of the income stream is made for dependent children, that amount is exempt from the income test [2].    

More → [156]

Calculating the deductible amount/tax free component

The method of calculating the deductible amount/tax free component depends on the person's individual circumstances. The available methods are:

  • new 1 July 2007 rules method
  • pre 1 July 2007 rules method
  • the saving provision.
Determining which method applies

Income stream providers determine whether the pre 1 July 2007 rules method or the new 1 July 2007 rules method applies to the defined benefit income stream. DVA determines whether the saving provision applies. DVA cannot determine whether the pre 1 July 2007 rules method or the new 1 July 2007 rules method applies.

Commencement day of the income stream

Conditions

Method to apply

On or after 1 July 2007

N/A

New 1 July 2007 rules method

Before 1 July 2007

The owner:

  • is below 60, and
  • has not made a commutation [2] since 1 July 2007, and
  • is not the reversionary beneficiary of a person who died after 30 June 2007.

Pre 1 July 2007 rules method

Before 1 July 2007

The owner:

  • is 60 or older, and
  • did not make a commutation between 1 July 2007 and their 60 — th birthday, and
  • the income stream does not include payments from elements untaxed within the fund

New 1 July 2007 rules method (the saving provision may apply)

Before 1 July 2007

The owner has made a commutation between 1 July 2007 and their 60 — th birthday

New 1 July 2007 rules method

Before 1 July 2007

The owner is the reversionary beneficiary of a person who died after 30 June 2007 and the income stream does not include payments from elements untaxed within the fund

New 1 July 2007 rules method

Before 1 July 2007

The income stream includes payments from elements untaxed within the fund, and the owner:

  • is 60 or older, or
  • is the reversionary beneficiary of a person who died after 30 June 2007.

Pre 1 July 2007 rules method

Deductible amount/tax free component calculation under the new 1 July 2007 rules method

Under the new 1 July 2007 rules method, the income stream provider calculates the deductible amount/tax free component under tax law. The provider then notifies DVA of the deductible amount/tax free component and the calculation method.

Deductible amount/tax free component may increase under the new 1 July 2007 rules method

The deductible amount/tax free component is based on a proportion of the total value of the superannuation interest. As the tax free component is a proportion of the gross payment, the deductible amount/tax free component may increase as payments from the income stream are increased with indexation.

Deductible amount/tax free component calculation under the pre 1 July 2007 rules method

Under the pre 1 July 2007 rules method, the income stream provider notifies DVA of the person's undeducted purchase price [2] (UPP), the deductible amount/tax free component, and the calculation method.

No increase under the pre 1 July 2007 rules method

The deductible amount/tax free component calculated under the pre 1 July 2007 rules method is fixed and cannot increase as the income stream payment increases with indexation. However, the deductible amount/tax free component may reduce if the person makes a commutation from their income stream that includes a part of the UPP.

Saving provision

A saving provision applies where all of the following conditions are met:

  • the defined benefit income stream commenced prior to 1 July 2007,
  • the person receives an income support pension [2] for a period commencing before and ending on or after their trigger day,
  • the person has not made a commutation between 1 July 2007 and their trigger day,
  • immediately before the trigger day a deductible amount/tax free component calculated under the pre 1 July 2007 rules method was recorded in the person's assessment,
  • an income stream provider advises a new deductible amount/tax free component calculated under the new 1 July 2007 rules method, and
  • the deductible amount/tax free component calculated under the new 1 July 2007 rules method is less than the deductible amount/tax free component calculated under the pre 1 July 2007 rules method.

The trigger day is the later of 1 July 2007 and the person's 60 — th birthday.

When the saving provision ceases to apply

The saving provision ceases to apply when any of the following events occur:

  • the person ceases to receive an income support pension,
  • the income stream ceases,
  • the person dies, or
  • the deductible amount/tax free component under the new 1 July 2007 rules method is greater than or equal to the deductible amount/tax free component under the pre 1 July 2007 rules method.
Abatements

An abatement occurs when an employee elects to take additional units of superannuation, but cannot pay the full amount due at the time of their retirement. The amount is repaid over a number of years after retirement by annually deducting a lump sum before the superannuation is made available. During the abatement period the abatement amount is not income [2] and not included in the gross payment for income test [2] purposes.


Section 46V [157] VEA

Section 46Y [158] VEA

VEA → (go back) [159]

Section 5H(8) (p) [160] VEA

VEA → (go back) [161]

Income exempted from the income test

Chapter 10.1 Ordinary Income [6]

More → (go back) [162]

The ordinary income of a person for a period means, as described in section 46 of VEA [50], the gross ordinary income from all sources for that period without any reduction, other than a reduction of business income.

 

 

A defined benefit income stream is an income stream [2]  where the payments are not fully determined by a purchase price [2]. Instead, payments are made with reference to a set formula based on:

  • the person's salary before retirement,
  • years of service, and/or
  • the governing rules [2]of the income stream.

 

 

Annual payment means the amount payable to the person for the year under the income stream.

According to section 5J of the VEA [8], a deductible amount, in relation to an income stream, means the sum of the amounts that are the tax free component [2], worked out under the tax law, of the payments received from the DBIS [2].

 

 

The taxation law includes the following acts:

  • the Income Tax Assessment Act 1936;
  • the Income Tax Assessment Act 1997; and
  • the Income Tax (Transitional Provisions) Act 1997

It also includes regulations and determinations made under the taxation law.

The tax free component is an amount calculated by the income stream provider under either Subdivision 307-C of the Income Tax Assessment Act 1997 or section 307-125 of the Income Tax (Transitional Provisions) Act 1997. The tax free component is the same as the deductible amount [2] for DVA purposes and reduces the amount of assessable income from a defined benefit income stream.

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

One element of the means test [2] for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their income increases above a certain threshold known as the income free area (IFA) [2].

 

 

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

The Undeducted Purchase Price (UPP) is that part of the amount contributed towards a pension or annuity which was not and will not be allowed as a tax deduction. The UPP is one of the factors used to determine the tax free component [2]. The person's income stream provider calculates the UPP.

 

 

Income support pension is:

  • a social security pension [2]
  • a service pension;
  • an income support supplement.

 

 

According to section 5H of the VEA [9] income is:

  • an amount earned, derived or received by a person for the person's own use or benefit;
  • a periodical payment by way of gift or allowance; or
  • a periodical benefit by way of gift or allowance.

 

 

One element of the means test [2] for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their income increases above a certain threshold known as the income free area (IFA) [2].

 

 

Examples of Defined Benefit Income Stream Assessment

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Last amended: 13 May 2008

Example 1 - Person over 60, no deductible amount in assessment

Jack, a 62 year old service pensioner [2], did not notify of the deductible amount [2] for his income stream [2] prior to 1 July 2007. The income stream commenced prior to 1 July 2007. Because no deductible amount was recorded under the pre 1 July 2007 rules method, Jack is not covered by the saving provision. From 1 July 2007, the new 1 July 2007 rules method will apply.

Example 2 - Person under 60, deductible amount already in assessment

James, a 58 year old service pensioner, did not notify of the deductible amount for his income stream prior to 1 July 2007. The income stream commenced prior to 1 July 2007. On 4 July 2007, the income stream provider notifies DVA that James has a deductible amount. Because he is not yet 60, the deductible amount is calculated under the pre 1 July 2007 rules method. The deductible amount applies from the date of notification. When James turns 60, the income stream provider notifies DVA that James' deductible amount has changed. The new deductible amount, calculated under the new 1 July 2007 rules method, is lower than the deductible amount calculated under the pre 1 July 2007 rules method. James is covered by the saving provision and the old deductible amount continues to apply.

Example 3 - Person over 60, covered by saving provision

Julia, a 70 year old service pensioner, advised of her deductible amount before 1 July 2007. Apart from her defined benefit income stream [2] of $100 per fortnight, she has no other income.  Her deductible amount is $20 per fortnight so the assessable income is $80 per fortnight. The deductible amount under the New 1 July 2007 rules method would be $0. Even though Julia's service pension has not been reduced by the income from the defined benefit income stream, the saving provision will apply from 1 July 2007. Because the deductible amount was notified prior to 1 July 2007, the service pension is considered to have been affected prior to the trigger day and the requirements of the saving provision are satisfied.

Example 4 - Claim for income support pension lodged after turning 60

John's claim for service pension lodged on 10 August 2007 is granted with that date as his start date. John has already turned 60. John is not covered by the saving provision because he did not receive a pension prior to his trigger day (the later of his 60 — th birthday and 1 July 2007) that was affected by a deductible amount calculated under the pre 1 July 2007 rules method. The deductible amount is therefore calculated under the New 1 July 2007 rules method.

Example 5 - Saving provision ceases to apply when new deductible amount is higher

Jenny, a 71 year old service pensioner, notified of her deductible amount prior to 1 July 2007. Her deductible amount under the New 1 July 2007 rules method was lower and the saving provision was applied. On 1 July 2008, her income stream provider advises of a new deductible amount that is higher than the old deductible amount. The saving provision ceases to apply from that date.

Example 6 - Commutation when assessed under pre 1 July 2007 rules method

Jerry, a 58 year old service pensioner, notified of his deductible amount prior to 1 July 2007. His deductible amount is assessed under the pre 1 July 2007 rules method. He makes a commutation [2] on 30 September 2007. From that date, the deductible amount is calculated under the new 1 July 2007 rules method.

Example 7 - Commutation after saving provision has been applied

Joseph, a 65 year old service pensioner, has his deductible amount calculated under the saving provision. He makes a commutation from his income stream on 30 September 2007. Because the commutation is not made between 1 July 2007 and his trigger day, his deductible amount continues to be calculated under the saving provision.

Example 8 - Saving provision ceases when person ceases to receive service pension

Jane receives service pension from mid 2005. She notified of her deductible amount prior to 1 July 2007. She turned 60 in 2006 and her deductible amount from 1 July 2007 was assessed under the saving provision. On 20 August 2007, her service pension is reduced to nil due to income from a part time job. Jane reapplies for service pension on 15 April 2009 after her income reduces. She is granted from that date and the deductible amount is calculated under the new 1 July 2007 rules method.


A service pension is an income support payment broadly equivalent to the social security age and disability support pensions. It may be paid once a veteran or partner has reached the nominated age or is incapacitated for work.

According to section 5J of the VEA [8], a deductible amount, in relation to an income stream, means the sum of the amounts that are the tax free component [2], worked out under the tax law, of the payments received from the DBIS [2].

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

A defined benefit income stream is an income stream [2]  where the payments are not fully determined by a purchase price [2]. Instead, payments are made with reference to a set formula based on:

  • the person's salary before retirement,
  • years of service, and/or
  • the governing rules [2]of the income stream.

 

 

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

Income Assessment of Purchased Income Streams

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Last amended 
Monday, July 1, 2019

VEA [165]

Part IIIB, Division 4 [88] VEA – Income from income streams

 

VEA (go back) [166]
Income assessment of purchased income streams

For a purchased income stream that is either asset-test exempt or asset-tested (long term), the assessable income equals the annual income stream payment less a deduction that is based on the return of the purchase price [2] over the term of the income stream [2].    

More [167]

The annual amount of ordinary income [2] produced by these income streams is determined by the following formula:

Annual Ordinary Income = Annual payment [2] – (Purchase price ÷ Relevant number [2]).

Purchase price to be reduced by commutations and residual capital value

Where partial commutations have been made from the income stream, the purchase price should be reduced by the amount of the commutations. For income streams that are not asset-test exempt income stream [2], the purchase price must be further reduced by the income stream's residual capital value [2] (if any).

Example of income assessment

Mark is sixty five years old and single. He purchases an asset-test exempt income stream [2] for $100,000 with a term of 16 years. His life expectancy [2] at the commencement day [2] is 15.41 years, (which for a life expectancy income stream must be rounded up to the next whole number being 16 years). His annual payment from the annuity totals $9,895. His assessable income from this income stream equals:

$9,895 - ($100,000 ÷ 16 years) = $3,645 per annum.

It should be noted, that if this product were paid for life, then the relevant number could not be rounded up in the assessment.

Minimum payment for certain income streams

VEA [168]

 

Section 46YA [54] VEA

 

VEA (go back) [169]

An account based income stream must make one or more payments during the financial year and the annual payment must not be less than the minimum payment.

Account based income streams must meet certain requirements regarding minimum payments. If the annual payment under the income stream is less than the minimum payment, the assessable income is taken to be the minimum payment.

For allocated income streams, the minimum payment is calculated:

  • before 1 July 2007 using a pension valuation factor, using the following formula:

​     minimum payment = account balance ÷ payment valuation factor; and

  • from 1 July 2007 using a percentage factor, using the following formula:

    minimum payment = account balance x percentage factor

  

More [170]

For market linked income streams, the minimum payment is calculated using a payment factor using the following formula:

minimum payment = account balance ÷ payment factor    

More [171]

 

For the purposes of each formula:

  • the account balance is the balance as at 1 July or, if the payment is for the first year, the balance at the commencement day,
  • the result is rounded to the nearest $10.00.

For the period commencing on 1 July 2008 and ending 30 June 2013, temporary relief measures were applied by the Government in response to the Global Financial Crisis to allow all account-based income stream recipients to elect to reduce their minimum annual payment to :

  • 50% of the required minimum payment for the period commencing 1 July 2008 and ending 30 June 2011; and
  • 75% of the required minimum payment for the period commencing 1 July 2011 and ending 30 June 2013.

These temporary relief measures ceased to apply from 1 July 2013.

Temporary relief was again applied over the period 1 July 2019 to 30 June 2023 in response to the Coronavirus pandemic.  Income stream recipients were able to elect to reduce their minimum annual payment to 50%  of the required minimum payment for the period commencing 1 July 2019 to 30 June 2023.

 

Calculating the annual payment

The annual payment under the income stream is calculated by the income stream provider and must always satisfy the rules for the minimum and maximum payments relevant to that particular type of income stream. The annual payment for an income stream is calculated using the formula:

annual payment = A + B

If the year is a part year, the annual payment reported by the income stream provider will be annualised using the formula:

annual payment = (A + B) x C ÷ D

where:

  • A is the amount received so far during the financial year
  • B is the amount expected to be received for the rest of the financial year
  • C is the number of days in the financial year, and
  • D is the number of days between the commencement of the income stream and 30 June.
Income assessment of asset-tested income streams (short term and long term deemed)

An income stream that is an asset-tested income stream (short term) [2]  or an asset-tested income stream (long term) deemed [2]is treated as a financial investment [2]. Its assessable income is determined under the deeming provisions [2].    More [172]

Assessing financial investments under the deeming provisions

Chapter 9.5 [5]

More (go back) [173]

Income assessment of asset-tested income streams (lifetime)

An income stream that is an asset-tested income stream (lifetime) has the following income test applied:

Purchased with

Income test

superannuation monies

BEFORE the assessment day (see Glossary), there is no assessable income.

ON OR AFTER the assessment day,
60 per cent of the annual payments is assessed as income.

non-superannuation monies

BEFORE the assessment day, the purchase amount is deemed using the deeming rates (9.5)

ON OR AFTER the assessment day,
60 per cent of the annual payments is assessed as income.

 

 

 


 

Part IIIB, Division 4 [88] VEA – Income from income streams

 

VEA (go back) [166]

Person's life expectancy for income stream assessment purposes

Section 10.5.7 [48]

 

More (go back) [174]

 

Section 46YA [54] VEA

 

VEA (go back) [169]

Payment factors

10.5.7/Payment Factors for Allocated Income Streams [175]

More (go back) [176]

Payment factors

10.5.7/Payment Factors for Market Linked Income Streams [177]

More (go back) [178]

 

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

The ordinary income of a person for a period means, as described in section 46 of VEA [50], the gross ordinary income from all sources for that period without any reduction, other than a reduction of business income.

 

 

Annual payment means the amount payable to the person for the year under the income stream.

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

The residual capital value is the amount (if any) remaining at the end of an income stream's term, consisting of a portion of the initial capital invested in the income stream [2].

 

 

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

An income stream is an asset-tested short term income stream if the term of the income stream is five years or less and it is not any of the following:

  • an asset-test exempt income stream [2];
  • an asset-tested income stream (long term); or
  • an asset-tested income stream (lifetime).

Legislation: subsection 5J(1) Veterans' Entitlements Act 1986

 

 

An income stream is an asset-tested long term income stream if it is:

  • not an asset-test exempt income stream [2];
  • 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

According to section 5J of the VEA, a financial investment means:

  • available money [2],
  • deposit money [2],
  • a managed investment [2],
  • a  listed security [2],
  • a loan [2] that has not been repaid in full,
  • an unlisted public security [2],
  • gold, silver or platinum bullion [2],
  • an asset tested income stream (short term) [2] ; or
  • an asset tested income stream (long term) [2] that is an account‑based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or
  • an asset‑tested income stream (long term) that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the requirements determined in an instrument under subsection (1G);

     but does not include an investment in an FHSA (within the meaning of the First Home Saver Accounts Act 2008) or a designated NDIS amount.

 

In 1990 the government introduced legislative changes called “deeming” to simplify the assessment of cash deposits and income from certain investments. These changes were made:

  • in response to pensioner concerns about complex income and assets test rules;
  • to encourage pensioners to maximise their private income.

Deemed income is the minimum rate that the government expects income support pensioners to earn from investments.

Banks created “pensioner accounts” which paid interest at the deeming rate set by the government.

On 1 July 1996 further changes meant the deeming rate was applied to all financial assets as defined in section 5J(1) of the VEA [8].

 

 

Assets Assessment of Defined Benefit and Purchased Income Streams

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Last amended: 13 May 2008

Asset value of 100% asset test exempt income streams

Regardless of whether an income stream is a 100% asset test exempt income stream [2] or a defined benefit income stream [2], no asset value is held in the assessment.

Asset value of asset tested income streams and 50% asset test exempt income steams

For asset tested income streams, the asset value assessed is the asset value of the income stream.  If the income stream is a 50% asset test exempt income stream, only 50% of the asset value is assessed.  The asset value is determined either once per year or twice per year as described in the following table.

If an income stream pays a pensioner...

Then the asset value is determined...

Once per year

Once a year at the start of the year

More than once per year

Twice a year at the start of each six month period.

If the income stream [2] has no account balance, the asset value is determined using the following formula:

Asset value = purchase price [2] - [(purchase price - residual capital value [2]) ? relevant number [2]] x term elapsed.

If the income stream has an account balance, the asset value is the current account balance.

Note – the purchase price should be adjusted to take account of any commutation [2] — s made from the income stream since commencement.

Calculation of term elapsed

The term elapsed is the number of years that have elapsed since the income stream's commencement day [2]. The number of years is rounded down to the nearest:

  • half-year, when the asset value is determined on a six monthly basis, or
  • whole year when the asset value is determined annually.
Example of asset value of asset tested income streams

Sally is sixty five years old and single. She purchases a ten year annuity for $150,000 with a residual capital value of $20,000. She receives a total payment of $18,337 per year. Monthly payments commence on 1 January. Her assessable asset from 1 January for the first six months will be:

$150,000 - [($150,000 - $20,000) ? 10 years] x 0 years = $150,000.

Her assessable asset from 30 June in that year will be:

$150,000 - [($150,000 - $20,000) ? 10 years] x 0.5 years = $143,500.

Example of asset value after a partial commutation

John purchases a five year term annuity for $50,000 with no residual capital value. At the end of two years, the assessable asset value is: $50,000 - [($50,000-$0) ? 5] x 2 = $30,000.

He commutes $6,000 at this point. The new assessable asset value after commutation is:

($50,000 - $6,000) - [( $50,000 - $6,000 - $0) ? 5] x 2 = $44,000 - $17,600 =$26,400.

Assets test assessment of defined benefit income streams

    

VEA ? [180]

Under Commission determinations 1998/11, 1998/12 and 1999/6, defined benefit income streams are determined to be 100% asset test exempt.


Income Support\Income Streams\Instrument 1998 No.11 [88]

Income Support\Income Streams\Instrument 1998 No. 12 [88]

Income Support\Income Streams\Instrument 1999 No.6 [88]

VEA ? (go back) [181]

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

A defined benefit income stream is an income stream [2]  where the payments are not fully determined by a purchase price [2]. Instead, payments are made with reference to a set formula based on:

  • the person's salary before retirement,
  • years of service, and/or
  • the governing rules [2]of the income stream.

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

The residual capital value is the amount (if any) remaining at the end of an income stream's term, consisting of a portion of the initial capital invested in the income stream [2].

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

Means Test Assessment of Asset-tested Income Streams - Lifetime

Last amended 
Monday, July 1, 2019

The following explains how asset-tested lifetime income streams are assessed under the income test and the assets test, and explains the additional rules pertaining to high surrender values or death benefits.

Note: grandfathering provisions are applied to lifetime income streams purchased before 1 July 2019, which are assessed as asset-tested income streams (long term) and could be asset-test exempt if purchased before 20 September 2007.

Income test assessment of asset-tested income stream (lifetime)

Before the assessment day (see Glossary) in relation to the income stream:

  • if the income stream was purchased with superannuation monies – no income is assessed
  • if the income stream was purchased with non-superannuation monies – the income stream is a managed investment and deemed under the deeming provisions (9.5).

On or after the assessment day in relation to the income stream, 60 per cent of the annual payments from an asset-tested income stream (lifetime) are assessed as income.

For deferred income streams (i.e. income streams that do not make payments for a set period of time after purchase), income is only assessed when the income stream is making payments (i.e. after the deferral period).

Example: Tom receives an annual payment of $5,000 from his lifetime income stream. Upon reaching his assessment day,  60 per cent ($3,000) is assessable income. As his payments increase due to indexation, 60 per cent of the payments will continue to be assessed under the income test for the duration of the lifetime income stream.

VEA: section 46YB Income – asset-tested income stream (lifetime),
section 52BAA Value of asset-tested income streams (lifetime) that are managed investments,
section 52BAB Value of asset-tested income streams (lifetime) that are not managed investments

Assets test assessment of asset-tested income stream (lifetime)

Before the assessment day (see Glossary) in relation to the income stream:

  • if the income stream was purchased with superannuation monies – no asset value is assessed. This is consistent with the treatment of other superannuation investments held by a person prior to retirement.
  • if the income stream was purchased with non-superannuation monies – the income stream is a managed investment and the full purchase amount (see Glossary) is assessed. This is consistent with the treatment of financial investments held by a person outside of superannuation prior to retirement.

On or after the assessment day in relation to the income stream, up to and including the threshold day (see Glossary) for the income stream, 60 per cent of the purchase amount of the asset-tested income stream (lifetime) is assessed, provided the income stream does not have high surrender values or death benefits (see below).

After the person’s threshold day, 30 per cent of the purchase amount will be assessed for the remaining duration of the lifetime income stream, provided the income stream does not have high surrender values or death benefits (see below).

If the income stream has a surrender value or death benefit above the limits outlined below in any current or future year, then the assessable asset value is the higher of:

  • the standard 60 per cent / 30 per cent assessment outlined above;
  • the highest surrender value above the limits outlined below on the current and any future day; and
  • the highest death benefit above the limits outlined below on the current and any future day.

Note: deferred income streams are assessed under the assets test from the assessment day. This can include the income stream being assessed under the assets test in the deferral period if payments commence after the assessment day.

Example: Tiffany purchases a lifetime income stream at age 70 (birthday 20 March 1949) on 1 July 2019.

  • The assessment day for the income stream is 1 July 2019.
  • The threshold day for the income stream is the day before Tiffany’s 84th birthday, which is 19 March 2033.
  • The purchase amount for the income stream is $200,000.
  • The income stream has surrender values and death benefits beneath the limits.

Initially, 60 per cent of the purchase amount ($120,000) is assessed under the assets test. 60 per cent continues to be assessed until 19 March 2033. From 20 March 2033, 30 per cent ($60,000) of the purchase price is assessed as an asset under the assets test. 30 per cent is then assessed for the rest of the duration of Tiffany’s lifetime income stream.

Example: Tamara purchases a deferred lifetime income stream at age 83 on 1 July 2019.

  • The assessment day for the income stream is 1 July 2019.
  • The threshold day for the income stream is the last day of a five year period starting on the assessment day, which is 30 June 2024.
  • The purchase amount for the income stream is $200,000.
  • The income stream has a deferral period of 2 years.
  • The income stream has surrender values and death benefits beneath the limits.

Initially, 60 per cent of the purchase amount ($120,000) is assessed under the assets test. 60 per cent continues to be assessed until 30 June 2024. From 1 July 2024, 30 per cent ($60,000) of the purchase price is assessed as an asset under the assets test. 30 per cent is then assessed for the rest of the duration of Tamara’s lifetime income stream. The deferral period for Tamara’s lifetime income stream does not impact her assets test assessment.

VEA: section 52BA Value of asset-tested income streams (lifetime) that are managed investments,
section 52BAB Value of asset-tested income streams (lifetime) that are not managed investments. 
To determine Threshold Day, see Veterans’ Entitlements (Number of expected years) Instrument 2019.

Limits for high surrender values or death benefits

The assets test rules for asset-tested income streams (lifetime) have additional provisions for products with surrender values or death benefits above the limits imposed by the Capital Access Schedule in the Superannuation Industry (Supervision) Regulations 1994.

The limits are outlined in a graph in the Explanatory Statement [182] of the Veterans' Entitlements (Value of Asset-tested Income Streams (Lifetime)) Determination 2019.

On a given day (the access day), the limit for surrender values is:

  • For a day during the 14 day period that begins on the assessment day for the income stream – the access amount.
  • For any other day, the greater of nil or the amount worked out using the following formula:

     [(access amount  ÷ life expectancy period for the income stream) ×

      remaining life expectancy],

                 less any commuted amounts.

On a given day (the access day), the limit for death benefits is:

  • For a day during the first half of the life expectancy period for the income stream – the access amount.
  • For any other day, the greater of nil or the amount worked out using the following formula:

     [(access amount  ÷ life expectancy period for the income stream) ×
      remaining life expectancy],

                 less any commuted amounts.

Where:

  • access amount – the maximum amount that would have been payable for the income stream, as determined by the contract or governing rules for the income stream, if the income stream had been commuted on the assessment day for the income stream, plus any installments paid for the income stream after the assessment day and before the access day.
  • life expectancy period – the number of days:
  • using the Life Tables (10.5.7 [183]) to calculate the number of days, at the assessment day, in the life expectancy of:
  • the person eligible to receive the income stream, or
  • for a joint income stream—the eldest of those eligible to receive the income stream, and
  • rounding that number of days down to the nearest whole number of years, and
  • converting those years to a number of days, assuming 365 days in a year.
  • remaining life expectancy means the number of days remaining in the life expectancy period for the income stream after subtracting the number of days in the period:
    • starting on the assessment day for the income stream, and
    • ending on the access day.

Example: Tamotsu purchases an asset-tested income stream (lifetime) at age 70 (birthday 20 September 1949) on 1 January 2020.

  • The assessment day for the income stream is 1 January 2020,
  • The threshold day for the income stream is the day before Tamotsu’s 84th birthday, which is 19 September 2033.
  • Tamotsu’s life expectancy period is 15 years (5,475 days).
  • The purchase amount for the income stream is $200,000.
  • The access amount for the income stream is $200,000.
  • Under the terms of the contract, the income stream has:
  • no surrender value until Tamotsu turns 80;
  • a surrender value of $200,000 while Tamotsu is 80; and
  • no surrender value again from when Tamotsu turns 81.
  • The income stream has no death benefit.
  • Tamotsu has made no commutations from the income stream.

Under the terms of the contract, for the year when Tamotsu is 80, the income stream has a surrender value. The surrender value limit when Tamotsu is 80 is:

($200,000 ÷ 5,475) × 1,924 = $70,283.11

as there are 1,924 days remaining in the life expectancy period.

The surrender value of Tamotsu’s income stream is $200,000, which is greater than the surrender value limit. For all days before Tamotsu turns 81, the standard assets test assessment is compared against the $200,000 surrender value. The higher value is assessed as an asset.

The assessable value of Tamotsu’s income stream is as follows:

  • From the threshold day until the day before Tamotsu turns 81 (i.e., from 1 January 2020 to 19 September 2029), the income stream has an assessable value of $200,000 (the full future surrender value).
  • From 20 September 2029 to the threshold day (19 September 2033), the income stream has an assessable value of $120,000 (60 per cent of $200,000).
  • From 20 September 2033 onwards, the income stream has an assessable value of $60,000 (30 per cent of $200,000).

Example: Tegan purchases an asset-tested income stream (lifetime) at age 70 (birthday 1 November 1949) on 1 January 2020.

  • The assessment day for the income stream is 1 January 2020.
  • The threshold day for the income stream is the day before Tegan’s 84th birthday, which is 30 October 2033.
  • Tegan’s life expectancy period is 17 years (6,205 days).
  • The purchase amount for the income stream is $200,000.
  • The access amount for the income stream is $200,000.
  • The income stream has no surrender value.
  • The income stream has a death benefit of $40,000 for the duration of the income stream. 
  • Tegan has made no commutations from the income stream.

Tegan’s income stream has a consistent death benefit of $40,000. This is less than 60 per cent of the purchase amount ($120,000), and will therefore not affect her assessable asset value prior to the threshold day for the income stream.

After the threshold day, the death benefit limit for the income stream is:

($200,000 ÷ 6,205) × 1,153 = $37,163.58

As the death benefit for Tegan’s income stream is $40,000, it is greater than the death benefit limit after the threshold day.

The assessable value of Tegan’s income stream is therefore:

  • 60 per cent of $200,000 ($120,000) until Tegan reaches their threshold day (30 October 2033).
  • $40,000 (the full current and future death benefit amount) from 1 November 2033 onwards.

Legislation: VEA section 52BAB, Veterans’ Entitlements (Value of asset-tested income streams (lifetime)) Determination 2019

Hybrid asset-tested income streams

Some products combine account-based income streams with lifetime income streams. In these cases, the product will be assessed as two separate income streams. The account-based component will be assessed as an asset-tested income stream (long term), and the lifetime component will be assessed as an asset-tested income stream (lifetime).

Types of hybrid products include those below.

  • Guaranteed minimum income for life products, which are account-based income streams with a lifetime component that makes regular payments to an individual once the account balance of the account-based income stream is reduced below a threshold specified in the product’s contract.
    • For these products, the lifetime component is considered to have been acquired at the point when the person begins to contribute towards the provision of the guarantee (e.g. through specific fees). Payments made to supplement the account-based income stream component are assessed under the asset-tested income stream (lifetime) arrangements. The lifetime component has its own purchase amount, which is assessed separately from the account balance of the account-based income stream component.
  • Lifetime income streams packaged with an account based income stream.
    • For these products, payments made by the lifetime income stream are assessed under the asset-tested income stream (lifetime) arrangements. The lifetime component has its own purchase amount, which is assessed separately from the account balance of the account-based income stream component.

VEA: Veterans’ Entitlements (Kind, Extent and Purchase Amount for Asset-tested Income Streams (Lifetime)) Determination 2019.

 

 

10.5.5 Special Provisions Regarding Self Managed Superannuation Funds and Small APRA Funds

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Overview

Apart from the exceptions in this section, self managed superannuation funds (SMSFs) and Small APRA Funds (SAFs) are assessed in the same manner as other income streams.

This section contains


Description of Self Managed Superannuation Funds and Small APRA Funds

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Last amended: 10 March 2011

Self managed superannuation funds

The Superannuation Industry (Supervision) Act 1993 defines a self managed superannuation fund (SMSF) as a superannuation fund [2] meeting the following criteria:

  • less than five members, and
  • all members are trustees, or are directors of the corporate trustee
  • no other person is a trustee, or a director of the corporate trustee
  • no member is an employee of another member unless the members are related
  • no trustee receives remuneration for acting as trustee
Exceptions to trustee requirements for SMSFs

The following exceptions apply to certain SMSFs and trustees:

  • If the SMSF has only one member, there may be two trustees or two directors of the corporate trustee provided that either:
  • the two trustees or directors are related, or
  • the two trustees or directors are not in an employee/employer relationship
  • If a member is under a legal disability or is subject to a guardianship order or similar arrangement, their personal legal representative may act on their behalf as trustee or director of the corporate trustee
  • If the member is a minor, their parent, guardian or personal legal representative may act on their behalf as trustee or director of the corporate trustee
  • If the member is deceased, their personal legal representative may act on their behalf as trustee or director of the corporate trustee until the deceased member's benefits are paid out from the fund
Small Australian Prudential Regulatory Authority (APRA) Funds

A Small APRA Fund (SAF) is a superannuation fund with less than five members that does not meet the criteria for an SMSF. The trustee of an SAF must be a corporate trustee approved by APRA. The trustee may receive remuneration for acting as trustee.

Types of income stream available from SMSFs and SAFs

Prior to 1 January 2006, SMSFs and SAFs were able to provide any type of income stream [2] except for a defined benefit income stream [2]. From 1 January 2006, SMSFs and SAFs may only offer allocated income streams and market linked income streams. However, any lifetime or life expectancy asset test exempt income streams that commenced prior to that date may continue to be paid.


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 [93]):
  • 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.

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

A defined benefit income stream is an income stream [2]  where the payments are not fully determined by a purchase price [2]. Instead, payments are made with reference to a set formula based on:

  • the person's salary before retirement,
  • years of service, and/or
  • the governing rules [2]of the income stream.

 

 

Additional Documentation Required from Self Managed Superannuation Funds and Small APRA Funds

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Last amended: 10 March 2011

Documentation required to ensure ATE compliance for SMSFs and SAFs

In addition to the income stream schedule, a self managed superannuation fund (SMSF) or small APRA fund (SAF) must supply the following documentation to determine whether an income stream is an asset test exempt income stream [2][glossary:.:]:

  • a copy of the trust deed,
  • a copy of the contract or other documentation under which the income stream is paid from the SMSF or SAF to the member,
  • if the fund has purchased an annuity to fund the income stream, a copy of the contract for the annuity, verifying compliance with the VEA,
  • documentation describing the indexation rate of the income stream and whether indexation is guaranteed,
  • for lifetime and life expectancy income streams (except where the SMSF or SAF has purchased the income stream from a life office to directly fund the income stream to the member), an actuarial certificate prepared in accordance with the Institute of Actuaries Australia's Guidance Note 465, and     More ? [187]
  • any other relevant documents or agreements setting out the conditions of the income stream.
Expiration of actuarial certificate

Actuarial certificates are valid for one year, ending on 30 June. The first actuarial certificate issued for an income stream will be valid for the period between the commencement day [2] and 30 June. When the actuarial certificate expires, a 26 week grace period applies, during which, the income stream retains asset test exempt status. If a new certificate has still not been supplied at the end of the grace period, the income stream is reassessed as if it had never been asset test exempt. Any resulting overpayment should be recovered under existing policy.     

More ? [188]

Actuarial certificate does not express a positive opinion

If the actuarial certificate does not express a positive opinion (or a high probability that the fund will be able to meet the income stream payments required) under Guidance Note 465, the income stream will retain asset test exempt status for 12 weeks to allow time for the income stream to be rolled over to a new asset test exempt income stream, or in the case of an error in the certificate, to obtain a new certificate expressing a positive opinion.

If no action is taken, the income stream will lose its asset test exempt status and become asset tested at the end of the 12 week period. The pensioner will be assessed as if the income stream never had asset test exempt status from the commencement day. This may result in a debt being raised.     

More ? [189]

Temporary debt relief where actuarial certificate does not express a positive opinion

In recognition of the global financial crisis of 2008 and 2009, temporary relief has been provided for holders of 100% asset test exempt income streams sourced from a SMSF or SAF who fail to meet the high probability test.      

More ? [190]


http:// [191]www.actuaries.asn.au [192]

More ? (go back) [193]

Reference Library

Overpayment Management Manual - Chapter 7 [124]

More ? (go back) [194]

10.5.5/Assessment where fund closes or is in financial difficulty [64]

More ? (go back) [195]

Waiver of debt under temporary debt relief arrangements

10.5.5/Assessment where Fund Closes or is in Financial Difficulty [64]

More ? (go back) [196]

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

Return of Purchase Price and Deprivation

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Last amended: 10 March 2011

Confirming return of purchase price for self managed superannuation funds and small APRA funds

For lifetime and life expectancy income streams paid by self managed superannuation funds (SMSFs) and small APRA funds (SAFs) to be asset test exempt, the purchase price [2] must be wholly converted to income. The Australian Government Actuary (AGA) will estimate the total payments to be paid under the income stream. The total must be equal to or greater than the purchase price for the income stream to be asset test exempt. If the total payments are less than the purchase price, the income stream cannot be asset test exempt.

Investigation of deprivation involving SMSFs and SAFs

The income stream must also be investigated to ensure no deprivation has occurred. Deprivation occurs where the income stream's purchase price exceeds its net present value, as calculated by the AGA. An income stream may still be asset test exempt where deprivation has occurred, but the deprived amount is included in the person's assessment as a deprived asset.

Example of deprivation involving SMSFs and SAFs

$100,000 is paid for a 10 year income stream which paid $6,000 per annum as income, not indexed. The total payments paid by the income stream are $60,000, but the net present value of the income stream as determined by an actuary is only $53,000.

The deprived amount is therefore $100,000 less $53,000 = $47,000.

The amount assessed as a deprived asset [2] is therefore $47,000, less $10,000 allowed limit per pension year = $37,000.

The deprived amount is treated as a financial asset [2] for pension assessment purposes for 5 years.    

More ? [198]

Treatment of unallocated reserves in SMSFs and SAFs

SMSFs and SAFs may hold unallocated reserves. This represents assets of the fund that have not been attributed to a specific member. Unallocated reserves should be attributed to each member of the fund in proportion to their interest in the fund. If it is not possible to attribute unallocated reserves in this manner, they should be attributed equally between all members.


Deprivation of Income and Assets

Chapter 9.6 [199]

More ? (go back) [200]

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

A deprived asset is an asset:

  • that has been disposed of for less than its value (that is, adequate financial consideration has not been received), and
  • the value of which is included in the value of the person's assets for the purpose of determining that person's rate of pension.

According to section 5J(1) [8] of the VEA a financial asset means;

  • a financial investment [2], or
  • a deprived asset [2]

 

Assessment where Fund Closes or is in Financial Difficulty

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Last amended: 10 March 2011

Closure of fund

Where a self managed superannuation fund (SMSF) or small APRA fund (SAF) is wound up, the income ceases to be paid on the date that the fund is wound up. Any remaining assets in the fund are assessable in the same manner as superannuation from that date.

Reporting arrangements

It is important that the department is informed when a SMSF or SAF is experiencing financial difficulty. A trustee's report should be provided, which should outline details on action being taken to either wind up the fund or restore the fund to viability and the expected date for finalising actions,

No payment for a period of more than twelve months

If an income stream [2] ceases to make payments for a period of more than twelve months, it ceases to exist as an income stream. This is because it no longer meets the criterion of making payments at least annually. Any remaining assets in the fund are assessable as superannuation from the date that the income stream ceases to exist.

The income stream is reassessed as if it was never an asset test exempt income stream from the commencement date. This may result in a debt being raised. Any resulting overpayment is recoverable under existing policy.      

More ? [202]

Loss of asset test exempt status can be avoided by commuting the income stream to a new asset test exempt income stream [2] prior to the end of the twelve month period since the last payment, that is, before the original stream loses asset test exempt status. When this happens, the debt provisions will not apply. Principles have been established to determine whether the new income stream is 100% or 50% asset test exempt.    

More ? [203]

Funds that made reduced payments

Where payments under an asset test exempt income stream are reduced below the amount specified in the contract, the income stream will lose its asset test exemption and is treated as though it was never an asset test exempt income stream. This may result in a debt. Any overpayment resulting from loss of asset test exempt status is recoverable under existing policy. Loss of asset test exempt status can be avoided by commuting the income stream to a new asset test exempt income stream prior to the reduction in payments.     

More ? [204]

Actuarial certificate does not express a positive opinion

Where a 100% asset test exempt income stream fails to meet the high probability requirements for actuarial certification and loses its asset test exemption, the income stream owner will have the option to either:

  • keep their asset test exemption by restructuring their income stream into an appropriate retail product, as outlined in the Veterans' Entitlements (Retention of Exemption for Asset-test Exempt Income Streams) Principles 2007, or      More ? [205]
  • lose their asset test exemption by restructuring their income stream into an asset tested market linked income stream (long term) within the SMSF or SAF.
Waiver of debt under temporary debt relief arrangements

Under normal circumstances if the income stream is restructured to form a market linked income stream, the income stream would be retrospectively reclassified as an asset tested (long term) income stream. A debt to the Commonwealth would be raised if the pension the person received exceeds what they should have received if the income stream had always been assessed as asset-tested (long term). Under the temporary relief arrangements, the debt will be waived if it meets the terms outlined in the Veterans' Entitlements (Class of Debts – Self Managed Superannuation and Small APRA Funds) Specification 2010. All such cases should be referred to the DVA Investment Database Unit, Sydney Office.     

More ? [206]

Duration of temporary debt relief arrangements

The temporary debt relief arrangements apply only to actuarial opinions given in the 2008-2009 and 2009-2010 financial years and expired on 30 June 2010.


Reference Library

Overpayment Management Manual - Chapter 7 [124]

More ? (go back) [207]

Income streams commencing on or after 20 September 07 are generally not asset test exempt

10.5.3/Determining what proportion of an asset test exempt income stream is exempt [60]

More ? (go back) [208]

Reference Library

Overpayment Management Manual - Chapter 7 [124]

More ? (go back) [209]

Legislation Library – Income Support

Veterans' Entitlements (Retention of Exemption for Asset-test Exempt Income Streams) Principles 2007 [88]

More ? (go back) [210]

Legislation Library – Income Support

Veterans' Entitlements (Class of Debts – Self Managed Superannuation and Small APRA Funds) Specification 2010 [88]

More ? (go back) [211]

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

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 [50] - lifetime income streams;
  • section 5JB [50] - life expectancy income streams; or
  • section 5JBA [50] - market-linked income streams.

10.5.6 Special Provisions Regarding Family Law Affected Income Streams

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VEA ? [213]

Part IIIB, Division 4, Subdivision C [88] VEA – Family law affected income streams

General Provisions for Family Law Affected Income Streams

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    Legislation [215]

 

Legislation

Veterans' Entitlements (Family law affected income stream) Principles [88] 2011

 

More ? (go back) [216]

 

Types of Family Law Affected income stream

An income stream is Family Law Affected if it is split between a person and their former partner under Part VIIB or VIIIAA of the Family Law Act 1975.  The table below describes the different types.

Type

Description

Original FLA income stream

The income stream that is the subject of a property settlement between the owner and the former partner

Primary income stream [217]

The portion of the original FLA income stream awarded to the owner of the original FLA income stream

Secondary income stream [218]

The portion of the original FLA income stream awarded to the former partner of the owner of the original FLA income stream

How an original FLA income stream is affected by separation

The original FLA income stream is split into the primary and secondary FLA income streams according to the terms of a superannuation agreement or a court order. The split may take one of two forms:

  • a percentage payment split, in which the owner and the former partner are each awarded a percentage of the original FLA income stream
  • a base amount payment split, in which the entitlement of the owner and former partner are specified as dollar amounts.
Percentage payment splits

Under a percentage payment split, the asset value, income stream payments and deduction in respect of return of capital applying to the original FLA income stream is the same as the sum of the portions of those amounts applying to the primary FLA income stream and the secondary FLA income stream.

Trustee discretion to pay lump sum to former partner under percentage payment split

Before the first income stream payment is paid under the split, the income stream provider may exercise their discretion under regulation 14G of the Family Law (Superannuation) Regulations 2001 to pay out the entitlement of the former partner as a lump sum. This can be done by either:

  • creating a separate income stream in favour of the former partner,
  • rolling the amount over to another fund or retirement savings account in favour of the former partner, or
  • paying the amount directly to the former partner.

In each case, the former partner's claim is finalised and there is no further entitlement to any payments in respect of the original FLA income stream.

Base amount payment splits

The income stream provider will generally seek to pay out the former partner's base amount interest in full immediately after the operative date by transfer, rollover or commutation to a lump sum. When this is done, the former partner is not entitled to receive any further payments in respect of the income stream. In some cases, this is not possible and the income stream is split into primary and secondary FLA income streams.

Means test assessment of base amount payment splits before date of first splittable payment

The former partner does not need to decide how they want to receive the base amount until the date of the first splittable payment. The assessable income from the primary and secondary FLA income streams cannot be calculated until the decision is made. Therefore, no income is assessed from either the primary or secondary FLA income streams between the operative time and the date of the first splittable payment. However, the asset value is still assessed in respect of income streams that are not 100 per cent asset test exempt.

Operative time

The operative time is the date from which assessment of the split payments commences. This table describes how the operative time is calculated.

If the payment split occurs under

then the operative time is

a court order

the time specified in the court order

a superannuation agreement and the income stream provider is not a self managed superannuation fund (SMSF)

the beginning of the fourth business day after the day on which a copy of the agreement is served on the income stream provider

a superannuation agreement and the income stream provider is an SMSF

the time when a copy of the agreement is served on the trustee

 

Generally, superannuation fund trustees will seek to pay out the non-member's 'base amount' interest immediately after the operative time via the transfer, roll-over or commutation to a lump sum.  However, in some cases, the payment of the base amount will be more complex.

 

Notional purchase price

The notional purchase price (NPP) refers to the purchase price of an FLA income stream at the time that the FLA income stream is assessed. The NPP is different from the purchase price of the original FLA income stream on its commencement day [2].


 

 

Legislation

Veterans' Entitlements (Family law affected income stream) Principles [88] 2011

 

More ? (go back) [216]

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

Percentage Payment Splits - Asset Test Exempt Income Streams

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Last amended 
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Calculating the asset value

This table shows how to calculate the asset value of an asset-test exempt income stream where the superannuation agreement or court order specified that payments from the original Family Law Affected income stream owned by the member are to be split with the former partner (non-member) on a percentage basis.

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.

Note that the assets test assessment for asset-test exempt income streams 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 percentages in the payment split for the owner (MSPROP) and the former partner (NMSPROP).

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 [2] 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: [217] (MSNPP) = NPP x MSPROP

NPP for the secondary FLA income stream: [218] (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 [2] 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

Determine the percentages in the payment split for the owner (MSPROP) and the former partner (NMSPROP).

Determine the gross income for the owner and the former partner.

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 deduction amount for the primary and secondary FLA income streams.

Deduction for the owner = MSNPP / relevant number [2]

Deduction for the former partner = NMSNPP / relevant number

Relevant number is the relevant number of the original FLA income stream on its commencement day.

5

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 original percentage payment split. The commutation will affect the gross income, NPP and therefore the deduction amount for both the primary and secondary FLA income streams.


 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Percentage Payment Splits - Asset-tested Long Term Income Streams

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Last amended 
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Calculating the asset value

This table shows how to calculate the asset value of an Asset-tested Long Term Income Stream where the superannuation agreement or court order specifies that payments from the original Family Law Affected income stream owned by the member are to be a split with the former partner (non-member) on a percentage basis.

For Asset-test Exempt Income Streams, Allocated or Account-based Income Streams, Defined Benefit Income Streams or Lifetime Income Streams, see the relevant pages under 10.5.6 Family Law Affected Income Streams.

For Asset-tested Long Term Income Streams:

Step

Action

1

Determine the percentages in the payment split for the owner (MSPROP) and the former partner (NMSPROP).

2

Calculate the notional purchase price (NPP) at the operative time for the original FLA income stream.

The NPP = the purchase price [2] of the original FLA income stream on the commencement day [2] less any commutation [2]s 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:  [217] (MSNPP) = NPP x MSPROP

NPP for the secondary FLA income stream:  [218] (NMSNPP) = NPP x NMSPROP

4

Determine the residual capital value (RCV) for the primary and secondary FLA income streams. Unless otherwise stated, the RCV for the primary FLA income stream (MSRCV) and the secondary FLA income stream (NMSRCV) will be calculated by applying MSPROP and NMSPROP to the RCV of the original FLA income stream.

MSRCV = MSPROP x RCV

NMSRCV = NMSPROP x RCV.

5

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

MSNPP – {([MSNPP – MSRCV] / relevant number [2]) x term elapsed}

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

NMSNPP – {([NMSNPP – NMSRCV] / relevant number) x term elapsed}

MSRCV and NMSRCV are respectively the residual capital value [2]s for the owner and the former partner.

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 commutations made after the operative time are 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

Determine the percentages in the payment split for the owner (MSPROP) and the former partner (NMSPROP).

Determine the gross income for the owner and the former partner.

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

Determine the residual capital value (RCV) for the primary and secondary FLA income streams. Unless otherwise stated, the RCV for the primary FLA income stream (MSRCV) and the secondary FLA income stream (NMSRCV) will be calculated by applying MSPROP and NMSPROP to the RCV of the original FLA income stream.

MSRCV = MSPROP x RCV of original FLA income stream

NMSRCV = NMSPROP x RCV of original FLA income stream

5

Calculate the deduction amount for the primary and secondary FLA income streams.

Deduction for the owner = (MSNPP – MSRCV) / relevant number

Deduction for the former partner = (NMSNPP – NMSRCV) / relevant number

Relevant number is the relevant number of the original FLA income stream on its commencement day.

6

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 commutations made after the operative time are apportioned between the primary and secondary FLA income streams in the same proportion as the original percentage payment split. The commutation will affect the gross income, NPP and therefore the deduction amount for both the primary and secondary FLA income streams.

Example: Henry buys a fixed term pension from XYZ super fund on 1 January 1998. His income stream is assessed by DVA as an 'asset-tested income stream (long term)'.

Purchase price = $100,000

Term = 20 years

Pension payments = $9,000 p.a. (paid monthly)

RCV = Nil

5 years after purchasing his income stream, Henry and Wilma get divorced.

Court orders a percentage payment split with 60% of payments going to Henry and 40% of payments going to Wilma. No commutations were made from the income stream between the commencement date and the operative time. Operative time is 1 January 2003.

Under the payment split, Henry receives a primary FLA income stream with annual payments of $5,400 and Wilma receives a secondary FLA income stream with payments of $3,600. These amounts are advised to DVA by the trustee.

Assets test

Step

Description

1

Henry's proportion of the payment split is 60%.

Wilma's proportion of the payment split is 40%.

2

Calculate the NPP of the original FLA income stream (original FLA) at the operative time.

As no commutations were made from the commencement date up to the operative time, the NPP of the original FLA income stream is $100,000.

3

Calculate the NPP for the primary FLA (member) and secondary FLA (non-member) income stream at the operative time.

MNPP (Henry)

= MPROP × NPP of the member income stream at the 'operative time'

= 0.60 × 100,000

= 60,000 (Henry's NPP at the operative time)

NMNPP (Wilma)

= MPROP × NPP of the member income stream at the operative time

= 0.40 × 100,000

= 40,000 (Wilma's NPP at the operative time).

4

Calculate the asset values for the member (primary FLA income stream) and non-member (secondary FLA income stream) at the operative time:

member asset value = 60,000 − {[(60,000 − 0) ÷ 20] × 5}

= $45,000

non-member asset value = 40,000 − {[(40,000 − 0) ÷ 20] × 5}

= $30,000.

In the above example:

  • the asset value of Henry's split income stream at the operative time is $45,000,
  • the asset value of Wilma's income stream at the operative time is $30,000.

Income Test

Step

Description

1

As per advice by the fund trustee, Henry's new gross annual payment is $5,400 (primary FLA). Wilma's gross annual payment (secondary FLA) is $3,600.

2

Calculate the deduction amount for each split income stream:

Member deduction amount = $60,000 ÷ 20 = $3,000

Non-member deduction amount = $40,000 ÷ 20 = $2,000

Henry's new deduction amount is $3,000.

Wilma's deduction amount is $2,000.

3

Calculate the assessable income by using the formula:

Henry has assessable income of $5,400 − $3,000 = $2,400

Wilma has assessable income of $3,600 − $2,000 = $1,600.

On 1 January 2005, 2 years after the operative time (1 January 2003) and 7 years after the commencement date (1 January 1998), the asset value of Henry's split income stream will be $39,000. The asset value of Wilma's income stream two years after the operative time will be $26,000.

Term elapsed since commencement date of the original FLA income stream: 7 years.

Member asset value (Henry) = $60,000 − {[($60,000 − 0) ÷ 20] × 7} = $39,000.

Non-member asset value (Wilma) = $40,000 − {[($40,000 − 0) ÷ 20] × 7} = $26,000.

Effect of commutations after operative time

On 1 January 2006 (three years after the operative time and eight years after the commencement date), Henry made a commutation of $10,000 from his income stream. As this is a FLA income stream, Henry is only entitled to receive 60% of the commuted amount (i.e. $6,000), while 40% will go to Wilma (i.e. $4,000). The 'proportional split' was originally set out in the superannuation agreement or court order.

Assets test when a commutation is made under a percentage payment split

Step

Description

1

Recalculate NPP for both the primary FLA (member) and secondary FLA (non-member) income stream by using the formula:

Adjusted MNPP = M/NPP − Proportion of the commuted amount

$60,000 − $6,000 = $54,000 (Henry's adjusted NPP)

Adjusted MNPP = NM/NPP − Proportion of the commuted amount

$40,000 − $4,000 = $36,000 (Wilma's adjusted NPP).

2

Using the adjusted value of both the primary FLA (member) and secondary FLA (non-member) NPPs, calculate new asset values for primary FLA and secondary FLA.

Term elapsed since the commencement date of the original FLA income stream is 8 years.

Member asset (Henry) = $54,000 − {[(54,000 − 0) ÷ 20] × 8}

= $32,400

Non-member asset (Wilma) = $36,000 − {[($36,000 − 0) ÷ 20] × 8}

= $21,600.

In the above example:

  • the asset value of Henry's income stream is $32,400,
  • the asset value of Wilma's income stream is $21,600.

On 1 January 2007, 4 years after the operative date (1 January 2003) and 9 years after the commencement date (1 January 1998), the asset value of Henry's FLA affected income stream will be $29,700. The asset value of Wilma's FLA income stream will be $19,800.

Term elapsed since the commencement date of the original FLA income stream: 9 years.

Member asset value (Henry): $54,000 − {[($54,000 − 0) ÷ 20] × 9} = $29,700.

Non-member asset value (Wilma): $36,000 − {[($36,000 − 0) ÷ 20] × 9} = $19,800.

Income test when a commutation is made under a percentage payment split.

Step

Description

1

Obtain from the fund trustee the new gross income after the commutation is made for both the member (primary FLA) and non-member (secondary FLA). In this example, Henry's new gross annual payment is $4,320. Wilma's new gross annual payment is now $2,880.

2

Recalculate the deduction amount for each split income stream using the formula:

Deduction amount = (NPP − RCV) ÷ RN (of the original FLA income stream)

Henry (deduction amount): $54,000 ÷ 20 = $2,700

Wilma (deduction amount): $36,000 ÷ 20 = $1,800.

3

Recalculate the assessable income of each split income stream using the formula:

Assessable income = Gross income − Deduction amount

Member assessable income (Henry) =
$4,320 − $2,700 = $1,620 p.a.

Non-member assessable income (Wilma) =
$2,880 − $1,800 = $1,080 p.a.


 

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

The residual capital value is the amount (if any) remaining at the end of an income stream's term, consisting of a portion of the initial capital invested in the income stream [2].

 

 

Percentage Payment Splits - Allocated Products and Market Linked Income Streams

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Last amended 
Monday, July 1, 2019
Calculating the asset value

This table shows how to calculate the asset value of Allocated (Account-based) and Market Linked Income Streams where the superannuation agreement or court order specifies that payments from the original Family Law Affected Income Stream, owned by the member, are to be split with the former partner (non-member) on a percentage basis.

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.

For Allocated (Account-based) or Market Linked Income Streams:

Step

Action

1

Determine the percentages in the payment split for the owner (MSPROP) and the former partner (NMSPROP).

2

Calculate the asset value of the primary FLA income stream [217] using the formula:

MSPROP x account balance of original FLA income stream at the operative time

Calculate the asset value of the secondary FLA income stream [218] using the formula:

NMSPROP x account balance of original FLA income stream at the operative time

Although there are two separate income streams (the primary and secondary FLA income streams), there is only one account balance. The account balance is only notionally split between the primary and secondary income streams.

Impact of subsequent commutations on asset value

Any commutation [2] 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 account balance 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

Determine the percentages in the payment split for the owner (MSPROP) and the former partner (NMSPROP).

Determine the gross income for the owner and the former partner.

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 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.

5

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 commutations made after the operative time are apportioned between the primary and secondary FLA income streams in the same proportion as the original percentage payment split. The commutation will affect the gross income, NPP and therefore the deduction amount for both the primary and secondary FLA income streams.


 

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

Percentage Payment Splits - Defined Benefit Income Streams

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Last amended 
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Calculating the asset value

Defined benefit income streams are not included in a person's assessable assets.

Income test assessment

All required information for the primary and secondary Family Law Affected (FLA) income streams is calculated by the income stream provider. The assessable income is the gross income less the deductible amount [2].

Other types of income streams

For Asset-test Exempt Income Streams, Allocated or Account-based 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.


 

According to section 5J of the VEA [8], a deductible amount, in relation to an income stream, means the sum of the amounts that are the tax free component [2], worked out under the tax law, of the payments received from the DBIS [2].

 

 

Percentage Payment Splits - Lifetime Income Streams

Last amended 
Monday, July 1, 2019

For Asset-test Exempt Income Streams, Defined Benefit Income Streams, Asset Tested Long Term Income Streams, Allocated (Account-based) or Market Linked Income Streams, see the relevant pages under 10.5.6 Family Law Affected Income Streams.

This table shows how to calculate the asset value of a Lifetime Income Stream where the superannuation agreement or court order specifies that payments from the original Family Law Affected (FLA) income stream, owned by the member, are to be split with the former partner (non‑member) on a percentage basis.

Calculating the asset value

To calculate the Lifetime Income Stream assessable asset values for the member (primary FLA) and non-member (secondary FLA) respectively:

Step

Description

1

Ascertain the percentages awarded to the member and the non-member in the payment split (e.g. 60% - 40%).

The percentages indicate the proportions (MPROP, NMPROP) in which the member's original interest is apportioned respectively between the member and the non-member.

2

Calculate the purchase amount of original FLA at operative time.

3

Calculate the purchase amount at the operative time for the primary FLA and secondary FLA respectively using the formula:

Purchase amount of primary FLA at operative time =
MPROP × Purchase amount of original FLA at operative time

Purchase amount of secondary FLA at operative time =
NMPROP × Purchase amount of original FLA at operative time

Where:

  • MPROP is the proportion of original FLA awarded to the member at the operative time, and
  • NMPROP is the proportion of original FLA awarded to the non-member at the operative time.

4

Calculate asset values for the primary FLA and secondary FLA as per the assets test rules for asset-tested income streams (lifetime), noting that:

  • The assessment day for the member and the non-member, in relation to the primary and secondary FLAs respectively, should be calculated separately. See the Glossary for assessment day for the method. In a case where the assessment day calculation would result in an assessment day for a person prior to the operative time, the operative time is the assessment day.
  • IF the assessment day for the original FLA had occurred, then the threshold day (see [223] Glossary for threshold day method) for the member and the non‑member, in relation to the primary and secondary FLAs respectively, should be the same as the threshold day for the original FLA. If such a calculation results in a threshold day prior to the income stream’s assessment day, then the threshold day for the income stream is the income stream’s assessment day.
  • IF the assessment day for the original FLA had not yet occurred, then the threshold day for the member and the non-member is calculated separately under the method in the Glossary.

Subsequent commutations made by member (assets test assessment)

The member may commute part of the original income stream after the operative time. The family law provisions require that such commuted amounts be apportioned between the primary FLA and the secondary FLA in the proportions resulting from the original percentage payment split.

The purchase amount for each member and non-member’s FLA will be reduced by their share of the commutation, with consequent adjustments to the member's and non-member's asset value.

Income test assessment

Calculate assessable income for member (primary FLA) and non-member (secondary FLA) respectively as follows:

Step

Description

1

Obtain gross annual payment for primary FLA and secondary FLA respectively.

2

The assessable income from the primary FLA and the secondary FLA is 60 per cent of the gross annual payment for each income stream.

Subsequent commutations made by member (income test assessment)

The member may commute part of the original income stream after the operative time. The family law provisions require that such commuted amounts be apportioned between the primary FLA and the secondary FLA in the percentages specified in the original percentage payment split.

After the commutation is made, the new gross annual payment amount must be obtained from the fund trustee for both the member (primary FLA) and non-member (secondary FLA). The purchase amount for each member and non-member must be reduced by his or her share of the commutation.

Example: Paris buys a fixed term pension from XYZ super fund on 1 January 2020. Paris’ income stream is assessed by DVA as an 'asset-tested income stream (lifetime)'.

Purchase amount = $200,000

Pension payments = $9,000 p.a

Assessment day = 1 January 2020

Threshold day = 1 July 2040

The income stream was purchased in one lump sum, and no commutations or additional payments were made after the assessment day.

5 years after purchasing the income stream, Paris and Sydney get divorced.

Court orders a percentage payment split with 60% of payments going to Paris and 40% of payments going to Sydney. Operative time is 1 January 2025.

Under the payment split, Paris receives a primary FLA income stream with annual payments of $5,400 and Sydney receives a secondary FLA income stream with payments of $3,600. These amounts are advised to DVA by the trustee.

Assets test

Step

Description

1

Paris’ proportion of the payment split is 60%.

Sydney’s proportion of the payment split is 40%.

2

Calculate the purchase amount of the original FLA income stream (original FLA) at the operative time.

As the income stream was purchased in one lump sum, and no commutations or additional payments were made after the assessment day, the purchase amount of the original FLA is $200,000.

3

Calculate the purchase amount for the primary FLA (member) and secondary FLA (non‑member) income stream at the operative time.

MNPP (Paris)

= MPROP × Purchase amount of the original FLA at the 'operative time'

= 0.60 × $200,000

= $120,000 (Paris’ NPP at the operative time)

NMNPP (Sydney)

= MPROP × Purchase amount of the original FLA at the operative time

= 0.40 × $200,000

= $80,000 (Sydney’s NPP at the operative time).

4

Calculate asset values for the primary FLA and secondary FLA as per the assets test rules for asset-tested income streams (lifetime), using purchase amounts of $120,000 for Paris, and $80,000 for Sydney, noting the threshold day of the original FLA was 1 July 2039, and the assessment day of the original FLA was 1 January 2020.

The assessment day and threshold day for the primary FLA and the secondary FLA will depend on Paris and Sydney’s individual circumstances (e.g. their age, when they meet a condition of release, when they reach pension age).

Income Test

Step

Description

1

As per advice by the fund trustee, Paris’ new gross annual payment is $5,400 (primary FLA). Sydney’s gross annual payment (secondary FLA) is $3,600.

2

Calculate the assessable income by using the formula:

Paris has assessable income of $5,400 x 0.6 = $3,240

Sydney has assessable income of $3,600 x 0.6 = $2,160

Effect of commutations after operative time

On 1 January 2028 (3 years after the operative time and 8 years after the assessment day), Paris made a commutation of $10,000 from the income stream. As this is a FLA income stream, Paris is only entitled to receive 60% of the commuted amount (i.e. $6,000), while 40% will go to Sydney (i.e. $4,000). The 'proportional split' was originally set out in the superannuation agreement or court order.

Assets test when a commutation is made under a percentage payment split

Step

Description

1

Recalculate purchase amount for both the primary FLA (member) and secondary FLA (non‑member) income stream by using the formula:

Adjusted purchase amount of primary FLA =
Purchase amount of primary FLA − Proportion of the commuted amount

$120,000 − $6,000 = $114,000 (Paris’ adjusted purchase amount)

Adjusted purchase amount of secondary FLA =
Purchase amount of secondary FLA − Proportion of the commuted amount

$80,000 − $4,000 = $76,000 (Sydney’s adjusted purchase amount).

2

Calculate asset values for the primary FLA and secondary FLA as per the assets test rules for asset-tested income streams (lifetime), using purchase amounts of $114,000 for Paris, and $76,000 for Sydney. The assessment day and threshold day for the primary and secondary FLAs would not change due to the commutation.

Income test when a commutation is made under a percentage payment split

Step

Description

1

Obtain from the fund trustee the new gross annual payments after the commutation is made for both the member (primary FLA) and non-member (secondary FLA). In this example, Paris’ new gross annual payment is $4,320. Sydney’s new gross annual payment is now $2,880.

2

Calculate the assessable income by using the formula:

Paris has assessable income of $4,320 x 0.6 = $2,592

Sydney has assessable income of $2,880 x 0.6 = $1,728

 

 

 

 

Base Amount Payment Splits - Asset-test Exempt Income Streams

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Last amended 
Monday, July 1, 2019

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 [2] 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 [2] of the original FLA income stream on the commencement day [2] less any commutation [2]s 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 [217]: (MSNPP) = NPP x MSPROP

NPP for the secondary FLA income stream [218]: (NMSNPP) = NPP x NMSPROP

5

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

MSNPP – MSNPP / relevant number [2] 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.


 

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their assets increase above a certain threshold known as the assets value limit (AVL). [94]

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Base Amount Payment Splits - Asset-tested Long Term Income Streams

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Last amended 
Monday, July 1, 2019

This table shows how to calculate the asset value of Long Term Income Streams 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 Asset-test Exempt Income Streams, Defined Benefit Income Streams, Asset-tested Allocated (Account-based) and Market Linked 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 [2] 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 [2] of the original FLA income stream on the commencement day [2] less any commutation [2]s 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: [217] (MSNPP) = NPP x MSPROP

NPP for the secondary FLA income stream: [218] (NMSNPP) = NPP x NMSPROP

5

Determine the residual capital value [2] (RCV) for the primary and secondary FLA income streams. Unless otherwise stated, the RCV for the primary FLA income stream (MSRCV) and the secondary FLA income stream (NMSRCV) will be calculated by applying MSPROP and NMSPROP to the RCV of the original FLA income stream.

MSRCV = MSPROP x RCV of original FLA income stream

NMSRCV = NMSPROP x RCV of original FLA income stream

6

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

MSNPP – (MSNPP – MSRCV) / relevant number [2] x term elapsed

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

NMSNPP – (NMSNPP – NMSRCV) / 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

Determine the residual capital value (RCV) for the primary and secondary FLA income streams. Unless otherwise stated, the RCV for the primary FLA income stream (MSRCV) and the secondary FLA income stream (NMSRCV) will be calculated by applying MSPROP and NMSPROP to the RCV of the original FLA income stream.

MSRCV = MSPROP x RCV of original FLA income stream

NMSRCV = NMSPROP x RCV of original FLA income stream

5

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

MSNPP – (MSNPP –MSRCV) / relevant number x term elapsed

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

NMSNPP – (NMSNPP – NMSRCV) / 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 commutations made after the operative time are 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

Determine the residual capital value (RCV) for the primary and secondary FLA income streams. Unless otherwise stated, the RCV for the primary FLA income stream (MSRCV) and the secondary FLA income stream (NMSRCV) will be calculated by applying MSPROP and NMSPROP to the RCV of the original FLA income stream.

MSRCV = MSPROP x RCV of original FLA income stream

NMSRCV = NMSPROP x RCV of original FLA income stream

7

Calculate the deduction amount for the primary and secondary FLA income streams.

Deduction for the owner = (MSNPP – MSRCV) / relevant number

Deduction for the former partner = (NMSNPP – NMSRCV) / relevant number

Relevant number is the relevant number of the original FLA income stream on its commencement day.

8

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.

Example: Henry buys a fixed term pension from the ZYX Super Fund on 1 January 1998 that makes the first income payment on 1 February 1998. His income stream is assessed by DVA as an 'asset tested income stream (long term) (ATLT)'.

Purchase price = $500,000

Term = 20 years

Pension payments = $45,000pa (payable once a year)

RCV = nil

Henry commutes $50,000 on 1 January 2003 and his pension payments are reduced to $39,500 pa.

Henry and Wilma subsequently divorce and on 2 January 2005, the court awards a base amount of $200,000 from Henry's income stream. The operative time is 1 January 2005.

As a result of the court order, Wilma receives the full amount of the first payment from the income stream (the first splittable payment) of $39,500 on 1 February 2005. Wilma then requests 25% of the remaining base amount as a lump sum. The remainder of the base amount will then be paid to Wilma as a secondary FLA, determined in accordance with Division 6.3 of the Family Law (Superannuation) Regulations 2001.

The superannuation fund paying Henry's pension notifies Wilma that she will receive a lump sum of $38,120 and a secondary FLA of $16,530 pa.

Note: The figure of $38,120 that Wilma receives is not 25% of $200,000 reduced by $39,500, i.e. $40,125. The difference between the two figures arises because of the need to take account of the pension valuation factors that apply to the commutation. Further details on these factors are contained in Regulation 58(5) of the Family Law (Superannuation) Regulations 2001.

Henry's annual payments (the primary FLA) will be $18,200 pa. The first of the split payments to Henry and Wilma commence on 1 February 2006.

Assets test: Stage 1 - assessment between operative time and date of first splittable payment, i.e. 2 January 2005 to 1 February 2005.

Step

Description

1

Obtain:

Base amount (BA) = $200,000, and

Value of member's superannuation interest (V) = $332,630.

2

Calculate proportions in which the asset backing the original FLA is split between the member (MPROP) and the non-member (NMPROP) at the operative time.

NMPROP = BA ÷ V

= $200,000 ÷ $332,630 = 0.601.

MPROP = 1 − NMPROP

= 1 − 0.601 = 0.399.

3

Calculate NPP for original FLA at operative time.

NPP of original FLA at operative time (NPP) = Purchase price of original FLA at commencement day − any commutations prior to operative time

= $500,000 − $50,000 = $450,000.

4

Calculate NPP at operative time for primary FLA and secondary FLA as follows:

M notional purchase price (MNPP) = MPROP × NPP of original FLA at operative time

= 0.399 × $450,000 = $179,550.

NM notional purchase price (NMNPP) = NMPROP × NPP of original FLA at operative time

= 0.601 × $450,000 = $270,450.

5

Calculate asset values for primary FLA (M asset) and secondary FLA (NM asset) as follows:

M asset = MNPP − [(MNPP − MRCV) ÷ RN] × term elapsed

= 179,550 − [(179,550 − 0) ÷ 20] × 7} = $116,708.

NM asset = NPP − [(NMNPP − NMRCV) ÷ RN] × term elapsed

= 270,450 − [(270,450 − 0) ÷ 20] × 7 = $175,793.

Note: There will be no further reassessment of asset values for the primary FLA and secondary FLA prior to the date of the first splittable payment unless the non-member's interest is paid out in full.

Assets test: stage 2 (assessment from date of first splittable payment)

At the date of the first splittable payment, Wilma receives the full amount of the payment that would have gone to Henry if the payment split had not occurred plus a lump sum of $38,120.

The remainder of Wilma's base amount is paid via a split income stream payment of $16,530 pa. Henry receives a split income stream payment of $18,200 pa.

Step

Description

1

Calculate proportions in which the asset backing the original FLA is split between member (MPROP) and non-member (NMPROP) at the date of the first splittable payment.

MPROP = primary FLA income stream payment (member) ÷ original FLA income stream payment

= 18,200 ÷ 39,500 = 0.461.

NMPROP = secondary FLA income stream payment (non-member) ÷ original FLA income stream payment

= 16,530 ÷ 39,500 = 0.418.

2

Calculate NPP for original FLA immediately before date of first splittable payment.

NPP of original FLA immediately before date of first splittable payment (NPP)

= Purchase price of original FLA at commencement day − any commutations prior to date of first splittable payment

= $500,000 − $50,000 = $450,000.

Note: The lump sum payment to Wilma of $38,120 is not included in this calculation as payment does not occur until the time of the first splittable payment.

3

Calculate NPP for primary FLA (MNPP) and secondary FLA (NMNPP) as follows:

MNPP = MPROP × NPP

= 0.461 × $450,000 = $207,450.

NMNPP = NMPROP × NPP

= 0.418 × $450,000 = $188,100.

4

Calculate asset values for primary FLA (M asset) and secondary FLA (NM asset) as follows:

M asset = MNPP − [(MNPP − MRCV) ÷ RN] × term elapsed

= 207,450 − [(207,450 − 0) ÷ 20] × 8 = $124,470.

NM asset = NMNPP − [(NMNPP − NMRCV) ÷ RN] × term elapsed

= 188,100 - [(188,100 − 0) ÷ 20] × 8 = $112,860.

Note: The values for M asset, NM asset will apply only for the period from 1 February 2005 to 31 December 2005, as the commencement day of the income stream was 1 January 1998. Therefore, assuming an 'annual payment frequency', the next annual depletion will occur on 1 January 2006 (the annual anniversary of the commencement day). The adjustment will be in accordance with the standard depletion formula for asset-tested income streams (long term).

 

Income test: stage 1 (assessment between operative time and date of first splittable payment)

  • No income assessed.
  • Any income payments assessed as exempt lump sums.

Income Test: stage 2 (assessment from date of first splittable payment).

Step

Description

1

Obtain new gross income for primary FLA and secondary FLA, i.e. $18,200pa for Henry and $16,530 for Wilma.

2

Calculate deduction amount for the primary FLA (MDA) and the secondary FLA (NMDA) using the formula:

MDA = (MNPP − MRCV) ÷ RN

= (207,450 − 0) ÷ 20 = $10,373.

NMDA = (NMNPP − NMRCV) ÷ RN

= (188,100 − 0) ÷ 20 = $9,405.

3

Reduce gross income for primary FLA and secondary FLA by the respective deduction amounts to determine assessable income.

Assessable income (Henry)

= $18,200 − $10,373 = $7,827.

Assessable income (Wilma)

= $16,530 − $9,405 = $7,125

 


 

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their assets increase above a certain threshold known as the assets value limit (AVL). [94]

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

The residual capital value is the amount (if any) remaining at the end of an income stream's term, consisting of a portion of the initial capital invested in the income stream [2].

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Base Amount Payment Splits - Allocated Products and Market Linked Income Streams

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Last amended 
Monday, July 1, 2019

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 [2] 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 [217] using the formula:

MSNPP x account balance of original FLA income stream

Calculate the asset value of the secondary FLA income stream [218] 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 [2] 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 commutation [2]s 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 [2] of the original FLA income stream on the commencement day [2] 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.


 

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their assets increase above a certain threshold known as the assets value limit (AVL). [94]

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their assets increase above a certain threshold known as the assets value limit (AVL). [94]

A commutation, in relation to an income stream [2], is the conversion of part or all of the future income stream payments into a lump sum. A commutation is similar to a withdrawal.

 

 

The purchase price of an income stream is the nominal sum of the paymetns made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts.

Note: In determining the means test assessment of asset-tested income streams (lifetime), the purchase price is not used.  Rather, the grossed up purchase amount.

Legislation: Section 5J(1) [8]of the VEA [8]

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

Base Amount Payment Splits - Defined Benefit Income Streams

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Last amended 
Monday, July 1, 2019
Calculating the asset value

Defined benefit income streams are not included in a person's assessable assets.

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

All required information for the primary and secondary Family Law Affect (FLA) income streams is calculated by the income stream provider. The assessable income is the gross income less the deductible amount [2].

Other types of income streams

For Asset-test Exempt Income Streams, Allocated or Account-based 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.

 


 

According to section 5J of the VEA [8], a deductible amount, in relation to an income stream, means the sum of the amounts that are the tax free component [2], worked out under the tax law, of the payments received from the DBIS [2].

 

 

Base Amount Payment Split - Lifetime Income Streams

Last amended 
Monday, July 1, 2019

This table shows how to calculate the asset value of Asset-tested Lifetime Income Streams 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 Asset-test Exempt Income Streams, Defined Benefit Income Streams, Asset-tested Allocated (Account-based) and Market Linked Income Streams or Long Term 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

Assets test assessment

Stage 1 - assessment of Lifetime Income Stream between operative time and date of first splittable payment:

  • Calculate asset value for member (primary FLA) and non-member (secondary FLA) as follows:

Step

Description

1

Ascertain value of base amount, and value of member's superannuation interest that is subject to payment split, as determined by court order or superannuation agreement at the operative time.

2

Calculate proportions in which the asset backing the original FLA is split between the member (MPROP) and non-member (NMPROP) at the operative time.

NMPROP = BA ÷ V

Where:

  • BA = base amount, and
  • V = value of the superannuation interest determined by the court, (for court orders) or notified by the trustee (for superannuation agreements) at the operative time.

MPROP = 1 – NMPROP

3

Calculate purchase amount for original FLA at operative time.

4

Calculate purchase amount at the operative time for the primary FLA and secondary FLA respectively as follows:

Member purchase amount  = MPROP × Purchase amount of original FLA at operative time

Non-Member purchase amount = NMPROP × Purchase amount of original FLA at operative time.

5

Calculate asset values for the primary FLA and secondary FLA as per the assets test rules for asset-tested income streams (lifetime), noting that:

  • The assessment day for the member and the non-member, in relation to the primary and secondary FLAs respectively, should be calculated separately. See the Glossary for the method for calculating the assessment day. In a case where the assessment day calculation would result in an assessment day for a person prior to the operative time, the operative time is the assessment day.
  • IF the assessment day for the original FLA had occurred, then the threshold day for the member and the non-member, in relation to the primary and secondary FLAs respectively, should be the same as the threshold day for the original FLA. If such a calculation results in a threshold day prior to the income stream’s assessment day, then the threshold day for the income stream is the income stream’s assessment day.
  • IF the assessment day for the original FLA had not yet occurred, then the threshold day for the member and the non-member is calculated separately under the method outlined in the [223] Glossary.
  • There will be no further reassessment of asset values for the primary FLA and secondary FLA prior to the date of the first splittable payment unless the non‑member's interest is paid out in full.

Stage 2 - assessment of income streams from date of first splittable payment onwards:

  • Note: The value calculated for MPROP, NMPROP in stage 2 will be different from that calculated in stage 1 because part, or all, of the base amount will have been paid out in the first splittable payment.
  • At the date of the first splittable payment after the operative time, both the member and the non-member may be entitled to receive a commuted amount from the income stream.
  • Any remaining unsatisfied portion of the base amount may then be split as primary and secondary FLA payments between the member and non-member, or may be payable as a single income stream to one of the members.

Step

Description

1

Calculate proportions in which the asset backing the original FLA is split between member and non-member at the date of the first splittable payment. These proportions are respectively MPROP and NMPROP.

They are calculated in the same manner as for ATE income streams, i.e.:

MPROP = primary FLA income stream payment (member) ÷ original FLA income stream payment,

NMPROP = secondary FLA income stream payment (non-member) ÷ original FLA income stream payment,

Where:

  • primary FLA income stream payment = first split income stream payment (annualised) from primary FLA after date of first splittable payment,
  • secondary FLA income stream payment = first split income stream payment (annualised) from secondary FLA after date of first splittable payment, and
  • original FLA income stream payment = payment from original FLA income stream (annualised) at time of first splittable payment, if the payment split had not occurred.

2

Calculate purchase amount for original FLA immediately before date of first splittable payment.

3

Calculate purchase amount for member's primary FLA and non-member's secondary FLA as follows:

Purchase amount for primary FLA = MPROP × Purchase amount for original FLA immediately prior to the date of the first splittable payment.

Purchase amount for secondary FLA = NMPROP × Purchase amount for original FLA immediately prior to the date of the first splittable payment.

4

Calculate asset values for the primary FLA and secondary FLA as per the assets test rules for asset-tested income streams (lifetime) in 10.5.4 Means Test Assessment of Asset-tested Income Streams (lifetime), noting that the assessment day and threshold day should remain the same as previously calculated at the operative time.

Subsequent commutations made by member (assets test assessment)

The member may commute part of the remaining portion of the member's original superannuation interest after the operative time.

The purchase amount for each member and non-member should be reduced by his or her share of the commutation. This variation to the purchase amount will necessitate consequent adjustments to the asset value held for each member and non-member.

Income test assessment

Stage 1 - assessment of income stream between operative time and date of first splittable payment:

  • No income assessed.
  • Any income paid out during this period is treated as an exempt lump sum.

Stage 2 - assessment of income streams from date of first splittable payment onwards:

  • First splittable payment is assessed as an exempt lump sum and therefore does not feature in the income test. If base amount is not satisfied by the first splittable payment then, once the first splittable payment has been made, subsequent split income stream payments will be determined using the following method.
  • Calculate assessable income for member (primary FLA) and non-member (secondary FLA) as follows:

Step

Description

1

Obtain new gross annual payment for primary FLA and secondary FLA.

2

The assessable income from the primary FLA and the secondary FLA is 60 per cent of the gross annual payment for each income stream.

Subsequent commutations made by member (income test assessment)

The member may commute part of the original income stream after the operative time. The family law provisions treat such commutations in the same way as for a percentage payment split, i.e. any commuted amounts must be apportioned between the primary FLA and the secondary FLA. The apportionment will be determined in accordance with the percentage of the split payment that goes to the primary FLA, and the percentage of the split payment that goes to the secondary FLA.

After the commutation is made, the new gross annual payment amount must be obtained from the fund trustee for both the member (primary FLA) and non-member (secondary FLA). The purchase amount for each member and non-member must be reduced by his or her share of the commutation.

10.5.7 Life Expectancy Tables, Pension Valuation Factors and Payment Factors

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This section contains the life expectancy [2] tables, used to determine the relevant number [2] for income streams [2]. Life expectancy tables for income streams commencing prior to 1 July 1983 are displayed in PIPS. It also contains a table of pension valuation factors [2] for defined benefit income streams [2] as well as general provisions for pension valuation factors.


Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

A factor used to calculate the notional asset value of a defined benefit income stream.

A defined benefit income stream is an income stream [2]  where the payments are not fully determined by a purchase price [2]. Instead, payments are made with reference to a set formula based on:

  • the person's salary before retirement,
  • years of service, and/or
  • the governing rules [2]of the income stream.

 

 

Table of Life Expectancy for Income Streams with a Commencement Day on or after 01/01/2015

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Last amended 
Friday, January 16, 2015

Last amended: 15 December 2009

How to use life expectancy tables

The following table shows how to select and use the appropriate life expectancy table in the assessment of an income stream.

 

Step

Action

1

Determine the commencement day [230] of the income stream to be assessed and ensure that the correct table is used.    

More ? [231]

 

2

Determine which persons the relevant number [232] must be obtained for.    

More ? [233]

 

3

Look down the age column to find the age of those persons at the commencement day in whole years.

4

Move across to the corresponding life expectancy factor (one for males, the other for females).

Table of life expectancy

The following table shows life expectancy [234] factors used for calculating the relevant number for males and females. The factors are based on the 2010 to 2012 life tables, published by the Australian Government Actuary. The table relates to income streams with a commencement day on or after 1 January 2015.

 

Age

M

F

Age

M

F

Age

M

F

15

65.53

69.71

44

37.75

41.36

73

13.11

15.38

16

65.55

68.72

45

36.81

40.41

74

12.40

14.60

17

63.56

67.74

46

35.88

39.45

75

11.72

13.83

18

62.59

66.76

47

34.95

38.50

76

11.05

13.08

19

61.63

65.77

48

34.03

37.56

77

10.41

12.33

20

60.67

64.79

49

33.11

36.61

78

9.78

11.61

21

59.70

63.81

50

32.20

35.67

79

9.18

10.90

22

58.74

62.82

51

31.29

34.74

80

8.60

10.21

23

57.78

61.84

52

30.38

33.80

81

8.04

9.55

24

56.81

60.86

53

29.49

32.87

82

7.51

8.90

25

55.85

59.87

54

28.59

31.95

83

7.00

8.29

26

54.89

58.89

55

27.71

31.02

84

6.52

7.70

27

53.92

57.90

56

26.83

30.10

85

6.06

7.14

28

52.96

56.92

57

25.95

29.19

86

5.64

6.61

29

52.00

55.94

58

25.09

28.28

87

5.24

6.11

30

51.04

54.96

59

24.22

27.37

88

4.87

5.65

31

50.08

53.98

60

23.37

26.47

89

4.52

5.22

32

49.13

53.00

61

22.52

25.57

90

4.21

4.82

33

48.17

52.02

62

21.68

24.68

91

3.92

4.45

34

47.22

51.04

63

20.85

23.80

92

3.66

4.12

35

46.26

50.06

64

20.03

22.92

93

3.44

3.82

36

45.31

49.09

65

19.22

22.05

94

3.24

3.55

37

44.36

48.12

66

18.41

21.18

95

3.06

3.32

38

43.41

47.14

67

17.62

20.33

96

2.91

3.11

39

42.46

46.18

68

16.84

19.48

97

2.78

2.93

40

41.51

45.21

69

16.07

18.64

98

2.67

2.77

41

40.57

44.24

70

15.31

17.80

99

2.57

2.62

42

39.62

43.28

71

14.56

16.98

100

2.46

2.50

43

38.68

42.32

72

13.83

16.18

     
                 

 


 

 

Life Expectancy Tables

Section 10.5.7 Life Expectancy Tables [48]

 

More ? (go back) [235]

 

Relevant number

10.5.2/Asset Test Exempt Income Streams – Lifetime [236]

10.5.2/Asset Test Exempt Income Streams – Life Expectancy [237]

10.5.2/Asset Test Exempt Income Streams – Defined Benefit [29]

10.5.2/Asset Test Exempt Income Streams – Market Linked [238]

 

More ? (go back) [239]

Table of Life Expectancy for Income Streams with a Commencement Day on or after 01/01/2010 to 31/12/2014

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Last amended 
Friday, January 16, 2015

Last amended: 15 December 2009

How to use life expectancy tables

The following table shows how to select and use the appropriate life expectancy table in the assessment of an income stream.

 

Step

Action

1

Determine the commencement day [230] of the income stream to be assessed and ensure that the correct table is used.    

More → [231]

 

2

Determine which persons the relevant number [232] must be obtained for.    

More → [233]

 

3

Look down the age column to find the age of those persons at the commencement day in whole years.

4

Move across to the corresponding life expectancy factor (one for males, the other for females).

Table of life expectancy

The following table shows life expectancy [234] factors used for calculating the relevant number for males and females. The factors are based on the 2005 to 2007 life tables, published by the Australian Government Actuary. The table relates to income streams with a commencement day on or after 1 January 2010 but before 1 January 2015.

 

Age

M

F

Age

M

F

Age

M

F

15

64.59

69.17

44

36.96

40.85

73

12.64

15.03

16

63.61

68.19

45

36.03

39.90

74

11.96

14.27

17

62.63

67.20

46

35.10

38.95

75

11.31

13.51

18

61.66

66.22

47

34.18

38.00

76

10.68

12.78

19

60.71

65.24

48

33.26

37.05

77

10.07

12.05

20

59.75

64.25

49

32.34

36.11

78

9.48

11.35

21

58.80

63.27

50

31.43

35.17

79

8.92

10.67

22

57.84

62.29

51

30.53

34.24

80

8.38

10.01

23

56.88

61.31

52

29.63

33.31

81

7.86

9.37

24

55.93

60.32

53

28.73

32.38

82

7.36

8.75

25

54.97

59.34

54

27.84

31.45

83

6.89

8.17

26

54.02

58.36

55

26.95

30.53

84

6.45

7.61

27

53.06

57.38

56

26.08

29.61

85

6.03

7.08

28

52.11

56.40

57

25.20

28.70

86

5.64

6.58

29

51.16

55.42

58

24.34

27.79

87

5.27

6.11

30

50.20

54.44

59

23.48

26.89

88

4.94

5.68

31

49.25

53.46

60

22.63

26.00

89

4.63

5.28

32

48.30

52.48

61

21.79

25.11

90

4.36

4.91

33

47.35

51.50

62

20.96

24.23

91

4.11

4.57

34

46.40

50.52

63

20.14

23.35

92

3.89

4.27

35

45.45

49.55

64

19.34

22.48

93

3.69

3.99

36

44.50

48.58

65

18.54

21.62

94

3.51

3.75

37

43.55

47.60

66

17.76

20.76

95

3.36

3.53

38

42.60

46.63

67

16.99

19.92

96

3.22

3.33

39

41.66

45.66

68

16.24

19.08

97

3.10

3.16

40

40.71

44.70

69

15.49

18.24

98

2.99

3.00

41

39.77

43.73

70

14.76

17.42

99

2.90

2.86

42

38.83

42.77

71

14.04

16.61

100

2.81

2.74

43

37.89

41.81

72

13.33

15.82

     
                 

 


 

 

Life Expectancy Tables

Section 10.5.7 Life Expectancy Tables [48]

 

More → (go back) [235]

 

Relevant number

10.5.2/Asset Test Exempt Income Streams – Lifetime [236]

10.5.2/Asset Test Exempt Income Streams – Life Expectancy [237]

10.5.2/Asset Test Exempt Income Streams – Defined Benefit [29]

10.5.2/Asset Test Exempt Income Streams – Market Linked [238]

 

More → (go back) [239]

Table of Life Expectancy for Income Streams with a Commencement Day on or after 01/01/2005 to 31/12/2009

  • Log in [241] to post comments

Last amended: 14 February 2011

How to use life expectancy tables

The following table shows how to select and use the appropriate life expectancy table in the assessment of an income stream.

Step

Action

1

Determine the commencement day [2] of the income stream to be assessed and ensure that the correct table is used.    

More ? [242]

2

Determine which persons the relevant number [2] must be obtained for.    

More ? [243]

3

Look down the age column to find the age of those persons at the commencement day in whole years.

4

Move across to the corresponding life expectancy factor (one for males, the other for females).

Table of life expectancy

The following table shows life expectancy [2] factors used for calculating the relevant number for males and females. The factors are based on the 2000 to 2002 life tables, published by the Australian Government Actuary. The table relates to income streams with a commencement day on or after 1 January 2005 but before 1 January 2010.

Age

M

F

Age

M

F

Age

M

F

15

63.28

68.41

44

35.91

40.18

73

12.11

14.78

16

62.30

67.42

45

34.98

39.23

74

11.50

14.05

17

61.33

66.44

46

34.06

28.28

75

10.90

13.33

18

60.37

65.45

47

33.13

37.33

76

10.32

12.63

19

59.43

64.48

48

32.22

36.39

77

9.77

11.94

20

58.48

63.50

49

31.30

35.45

78

9.24

11.27

21

57.54

62.52

50

30.39

34.51

79

8.73

10.61

22

56.59

61.54

51

29.49

33.58

80

8.24

9.98

23

55.65

60.57

52

28.59

32.66

81

7.77

9.38

24

54.71

59.59

53

27.69

31.73

82

7.32

8.81

25

53.77

58.61

54

26.80

30.82

83

6.89

8.27

26

52.83

57.63

55

25.92

29.91

84

6.48

7.76

27

51.89

56.65

56

25.05

29.00

85

6.11

7.28

28

50.95

55.68

57

24.19

28.10

86

5.77

6.83

29

50.01

54.70

58

23.34

27.21

87

5.47

6.41

30

49.07

53.72

59

22.49

26.32

88

5.20

6.02

31

48.13

52.75

60

21.66

25.44

89

4.95

5.66

32

47.19

51.77

61

20.84

24.57

90

4.74

5.33

33

46.24

50.80

62

20.04

23.71

91

4.54

5.03

34

45.30

49.82

63

19.24

22.85

92

4.36

4.75

35

44.35

48.85

64

18.46

22.00

93

4.19

4.50

36

43.41

47.88

65

17.70

21.15

94

4.03

4.28

37

42.47

46.91

66

16.95

20.32

95

3.87

4.07

38

41.53

45.94

67

16.21

19.49

96

3.73

3.88

39

40.58

44.98

68

15.48

18.67

97

3.60

3.71

40

39.65

44.01

69

14.78

17.87

98

3.47

3.55

41

38.71

43.05

70

14.08

17.08

99

3.35

3.40

42

37.77

42.09

71

13.41

16.29

100

3.24

3.26

43

36.84

41.14

72

12.75

15.53


Life expectancy tables

Section 10.5.7 [48]

More ? (go back) [244]

Relevant number

10.5.2/Asset Test Exempt Income Streams – Lifetime [236]

10.5.2/Asset Test Exempt Income Streams – Life Expectancy [237]

10.5.2/Asset Test Exempt Income Streams – Defined Benefit [29]

10.5.2/Asset Test Exempt Income Streams – Market Linked [238]

More ? (go back) [245]

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

Table of Life Expectancy for Income Streams with a Commencement Day on or after 01/01/2000 to 31/12/2004

  • Log in [246] to post comments

Last amended: 13 May 2008

Income streams commencing between 20 September 2004 and 31 December 2004

Purchased lifetime, life expectancy and market linked income streams [2] commencing between 20 September 2004 and 31 December 2004 may use either these tables or the tables for an income stream commencing on or after 1 January 2005 to determine the person's life expectancy [2]. Whichever table is used to determine the life expectancy must also be used to determine the relevant number [2] for the income stream.     

More ? [247]

How to use life expectancy tables

The following table shows how to select and use the appropriate life expectancy table in the assessment of an income stream.

Step

Action

1

Determine the commencement day [2] of the income stream to be assessed and ensure that the correct table is used.    

More ? [248]

2

Determine which persons the relevant number [2] must be obtained for.    

More ? [249]

3

Look down the age column to find the age of those persons at the commencement day in whole years.

4

Move across to the corresponding life expectancy factor (one for males, the other for females).

Table of life expectancy

The following table shows life expectancy factors used for calculating the relevant number [2] for males and females. The factors are based on the 1995 to 1997 life tables, published by the Australian Government Actuary.

The table relates to income streams with a commencement day on or after 1 January 2000 but before 1 January 2005. The age used refers to the age on the income stream's commencement day.

Age

M

F

Age

M

F

Age

M

F

15

61.38

66.97

44

34.15

38.76

73

10.96

13.67

16

60.41

65.98

45

33.22

37.81

74

10.38

12.96

17

59.44

65.00

46

32.30

36.86

75

9.82

12.26

18

58.49

64.02

47

31.38

35.92

76

9.27

11.58

19

57.55

63.04

48

30.46

34.98

77

8.74

10.92

20

56.61

62.07

49

29.55

34.04

78

8.24

10.28

21

55.68

61.09

50

28.64

33.11

79

7.76

9.67

22

54.75

60.12

51

27.74

32.18

80

7.30

9.09

23

53.81

59.14

52

26.85

31.26

81

6.87

8.53

24

52.88

58.16

53

25.97

30.34

82

6.46

8.00

25

51.94

57.18

54

25.09

29.43

83

6.08

7.48

26

51.01

56.21

55

24.22

28.53

84

5.73

7.00

27

50.07

55.23

56

23.36

27.63

85

5.40

6.53

28

49.14

54.25

57

22.52

26.74

86

5.10

6.10

29

48.20

53.27

58

21.68

25.86

87

4.82

5.69

30

47.26

52.30

59

20.86

24.98

88

4.57

5.32

31

46.32

51.32

60

20.05

24.11

89

4.35

4.98

32

45.38

50.35

61

19.25

23.25

90

4.16

4.67

33

44.44

49.38

62

18.46

22.39

91

3.99

4.39

34

43.50

48.41

63

17.70

21.54

92

3.86

4.15

35

42.57

47.44

64

16.94

20.70

93

3.73

3.93

36

41.63

46.47

65

16.21

19.88

94

3.62

3.72

37

40.69

45.50

66

15.49

19.06

95

3.50

3.54

38

39.75

44.53

67

14.79

18.25

96

3.39

3.37

39

38.81

43.56

68

14.11

17.46

97

3.28

3.21

40

37.88

42.60

69

13.44

16.67

98

3.18

3.07

41

36.94

41.64

70

12.80

15.90

99

3.07

2.93

42

36.01

40.68

71

12.17

15.14

100

2.98

2.81

43

35.08

39.72

72

11.56

14.40


10.5.7/Table of Life Expectancy for Income Streams with a Commencement Day on or after 01/01/2005 to 31/12/2009 [250]

More ? (go back) [251]

Life expectancy tables

Section 10.5.7 [48]

More ? (go back) [252]

Relevant number

10.5.2/Asset Test Exempt Income Streams – Lifetime [236]

10.5.2/Asset Test Exempt Income Streams – Life Expectancy [237]

10.5.2/Asset Test Exempt Income Streams – Defined Benefit [29]

10.5.2/Asset Test Exempt Income Streams – Market Linked [238]

More ? (go back) [253]

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Table of Life Expectancy for Income Streams with a Commencement Day on or after 01/01/96 to 31/12/99

  • Log in [254] to post comments

Last amended: 13 May 2008

How to use life expectancy tables

The following table shows how to select and use the appropriate life expectancy [2] table in the assessment of an income stream [2].

Step

Action

1

Determine the commencement day [2] of the income stream to be assessed and ensure that the correct table is used.    

More ? [255]

2

Determine which persons the relevant number [2] must be obtained for.    

More ? [256]

3

Look down the age column to find the age of those persons at the commencement day in whole years.

4

Move across to the corresponding life expectancy factor (one for males, the other for females)

Table of life expectancy

The following table shows life expectancy factors used for calculating the relevant number for males and females. The factors are based on the 1990 to 1992 life tables, published by the Australian Government Actuary.

The table relates to income streams with a commencement day on or after 1 January 1996 but before 1 January 2000. The age used refers to the age on the income stream's commencement day.

Age

M

F

Age

M

F

Age

M

F

15

60.18

66.11

44

32.94

37.95

73

10.39

13.22

16

59.21

65.13

45

32.01

37.00

74

9.84

12.53

17

58.24

64.15

46

31.09

36.05

75

9.31

11.87

18

57.29

63.17

47

30.18

35.11

76

8.80

11.22

19

56.35

62.20

48

29.27

34.18

77

8.32

10.60

20

55.42

61.22

49

28.37

33.25

78

7.86

9.99

21

54.48

60.25

50

27.48

32.32

79

7.42

9.41

22

53.55

59.28

51

26.59

31.40

80

7.00

8.85

23

52.62

58.30

52

25.71

30.49

81

6.60

8.31

24

51.69

57.33

53

24.84

29.58

82

6.23

7.80

25

50.76

56.35

54

23.98

28.68

83

5.87

7.31

26

49.82

55.38

55

23.13

27.78

84

5.54

6.84

27

48.89

54.40

56

22.30

26.90

85

5.23

6.40

28

47.95

53.43

57

21.47

26.02

86

4.93

5.99

29

47.01

52.45

58

20.66

25.14

87

4.66

5.60

30

46.07

51.48

59

19.87

24.27

88

4.40

5.24

31

45.13

50.50

60

19.09

23.42

89

4.15

4.90

32

44.19

49.53

61

18.32

22.57

90

3.93

4.59

33

43.25

48.56

62

17.57

21.72

91

3.72

4.30

34

42.31

47.58

63

16.83

20.89

92

3.52

4.04

35

41.37

46.61

64

16.12

20.07

93

3.34

3.81

36

40.42

45.64

65

15.41

19.26

94

3.19

3.60

37

39.48

44.67

66

14.73

18.45

95

3.05

3.41

38

38.54

43.70

67

14.06

17.66

96

2.93

3.24

39

37.60

42.74

68

13.40

16.89

97

2.84

3.09

40

36.66

41.77

69

12.76

16.12

98

2.76

2.94

41

35.73

40.81

70

12.14

15.37

99

2.70

2.82

42

34.79

39.85

71

11.54

14.64

100

2.64

2.69

43

33.86

38.90

72

10.95

13.92


Life expectancy tables

Section 10.5.7 [48]

More ? (go back) [257]

Relevant number

10.5.2/Asset Test Exempt Income Streams – Lifetime [236]

10.5.2/Asset Test Exempt Income Streams – Life Expectancy [237]

10.5.2/Asset Test Exempt Income Streams – Defined Benefit [29]

10.5.2/Asset Test Exempt Income Streams – Market Linked [238]

More ? (go back) [258]

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Table of Life Expectancy for Income Streams with a Commencement Day on or after 01/05/93 to 31/12/95

  • Log in [259] to post comments

Last amended: 13 May 2008

How to use life expectancy tables

The following table shows how to select and use the appropriate life expectancy [2] table in the assessment of an income stream [2].

Step

Action

1

Determine the commencement day of the income stream to be assessed and ensure that the correct table is used.    

More ? [260]

2

Determine which persons the relevant number [2] must be obtained for.    

More ? [261]

3

Look down the age column to find the age of those persons at the commencement day in whole years.

4

Move across to the corresponding life expectancy factor (one for males, the other for females)

Table of life expectancy

The following table shows life expectancy factors used for calculating the relevant number for males and females. The factors are based on the 1985 to 1987 life tables, published by the Australian Government Actuary.

The table relates to income streams with a commencement day on or after 1 May 1993 but before 1 January 1996. The age used refers to the age on the income stream's commencement day.

Age

M

F

Age

M

F

Age

M

F

15

58.83

65.07

44

31.68

36.99

73

9.80

12.69

16

57.85

64.09

45

30.76

36.05

74

9.28

12.02

17

56.90

63.11

46

29.85

35.11

75

8.78

11.37

18

55.96

62.14

47

28.94

34.18

76

8.30

10.75

19

55.04

61.17

48

28.04

33.26

77

7.84

10.14

20

54.13

60.21

49

27.16

32.34

78

7.40

9.55

21

53.21

59.24

50

26.28

31.43

79

6.98

8.98

22

52.30

58.27

51

25.41

30.52

80

6.58

8.44

23

51.38

57.30

52

24.55

29.62

81

6.20

7.92

24

50.45

56.33

53

23.70

28.73

82

5.84

7.42

25

49.52

55.35

54

22.86

27.84

83

5.50

6.95

26

48.59

54.38

55

22.04

26.96

84

5.18

6.51

27

47.66

53.41

56

21.23

26.08

85

4.89

6.09

28

46.72

52.43

57

20.44

25.22

86

4.62

5.69

29

45.78

51.46

58

19.65

24.35

87

4.38

5.32

30

44.84

50.49

59

18.89

23.50

88

4.16

4.98

31

43.90

49.51

60

18.13

22.65

89

3.97

4.66

32

42.95

48.54

61

17.39

21.81

90

3.79

4.37

33

42.01

47.57

62

16.67

20.98

91

3.64

4.10

34

41.06

46.60

63

15.96

20.16

92

3.50

3.86

35

40.12

45.63

64

15.27

19.35

93

3.37

3.65

36

39.17

44.66

65

14.60

18.56

94

3.24

3.45

37

38.22

43.69

66

13.93

17.77

95

3.12

3.27

38

37.28

42.72

67

13.29

17.00

96

3.00

3.11

39

36.34

41.76

68

12.66

16.24

97

2.89

2.97

40

35.40

40.80

69

12.05

15.50

98

2.78

2.84

41

34.46

39.84

70

11.46

14.77

99

2.67

2.72

42

33.53

38.89

71

10.89

14.06

100

2.57

2.62

43

32.60

37.94

72

10.33

13.37


Life expectancy tables

Section 10.5.7 [48]

More ? (go back) [262]

Relevant number

10.5.2/Asset Test Exempt Income Streams – Lifetime [236]

10.5.2/Asset Test Exempt Income Streams – Life Expectancy [237]

10.5.2/Asset Test Exempt Income Streams – Defined Benefit [29]

10.5.2/Asset Test Exempt Income Streams – Market Linked [238]

More ? (go back) [263]

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Table of Life Expectancy for Income Streams with a Commencement Day on or after 01/09/88 to 30/04/93

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Last amended: 13 May 2008

How to use life expectancy tables

The following table shows how to select and use the appropriate life expectancy [2] table in the assessment of an income stream [2].

Step

Action

1

Determine the commencement day [2] of the income stream to be assessed and ensure that the correct table is used.    

More ? [265]

2

Determine which persons the relevant number [2] must be obtained for.    

More ? [266]

3

Look down the age column to find the age of those persons at the commencement day in whole years.

4

Move across to the corresponding life expectancy factor (one for males, the other for females)

Table of life expectancy

The following table shows life expectancy factors used for calculating the relevant number for males and females. The factors are based on the 1980 to 1982 life tables, published by the Australian Government Actuary.

The table relates to income streams with a commencement day on or after 1 September 1988 but before 1 May 1993. The age used refers to the age on the income stream's commencement day.

Age

M

F

Age

M

F

Age

M

F

15

57.44

64.27

44

30.39

36.22

73

9.25

12.19

16

56.48

63.29

45

29.49

35.28

74

8.77

11.53

17

55.52

62.31

46

28.60

34.36

75

8.31

10.89

18

54.59

61.34

47

27.71

33.43

76

7.86

10.27

19

53.68

60.37

48

26.84

32.52

77

7.44

9.67

20

52.78

59.40

49

25.98

31.61

78

7.03

9.09

21

51.87

58.43

50

25.12

30.70

79

6.64

8.54

22

50.96

57.46

51

24.28

29.80

80

6.27

8.01

23

50.04

56.49

52

23.45

28.91

81

5.92

7.50

24

49.12

55.51

53

22.63

28.02

82

5.58

7.02

25

48.19

54.54

54

21.82

27.14

83

5.26

6.57

26

47.26

53.57

55

21.02

26.27

84

4.96

6.14

27

46.33

52.59

56

20.24

25.40

85

4.67

5.74

28

45.39

51.62

57

19.47

24.55

86

4.40

5.37

29

44.45

50.64

58

18.71

23.70

87

4.14

5.02

30

43.51

49.67

59

17.96

22.85

88

3.91

4.69

31

42.56

48.70

60

17.23

22.02

89

3.68

4.39

32

41.61

47.72

61

16.52

21.20

90

3.47

4.11

33

40.67

46.75

62

15.81

20.38

91

3.28

3.85

34

39.72

45.78

63

15.13

19.58

92

3.11

3.61

35

38.77

44.81

64

14.46

18.78

93

2.94

3.38

36

37.82

43.84

65

13.80

18.00

94

2.80

3.18

37

36.88

42.88

66

13.17

17.22

95

2.66

2.99

38

35.94

41.91

67

12.55

16.46

96

2.54

2.81

39

35.00

40.95

68

11.95

15.72

97

2.43

2.64

40

34.07

40.00

69

11.37

14.98

98

2.32

2.49

41

33.14

39.05

70

10.81

14.26

99

2.23

2.35

42

32.22

38.10

71

10.27

13.56

100

2.13

2.22

43

31.30

37.16

72

9.75

12.87


Life expectancy tables

Section 10.5.7 [48]

More ? (go back) [267]

Relevant number

10.5.2/Asset Test Exempt Income Streams – Lifetime [236]

10.5.2/Asset Test Exempt Income Streams – Life Expectancy [237]

10.5.2/Asset Test Exempt Income Streams – Defined Benefit [29]

10.5.2/Asset Test Exempt Income Streams – Market Linked [238]

More ? (go back) [268]

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Table of Life Expectancy for Income Streams with a Commencement Day on or after 01/07/83 to 31/08/88

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Last amended: 13 May 2008

How to use life expectancy tables

The following table shows how to select and use the appropriate life expectancy [2] table in the assessment of an income stream [2].

Step

Action

1

Determine the commencement day [2] of the income stream to be assessed and ensure that the correct table is used.    

More ? [270]

2

Determine which persons the relevant number [2] must be obtained for.    

More ? [271]

3

Look down the age column to find the age of those persons at the commencement day in whole years.

4

Move across to the corresponding life expectancy factor (one for males, the other for females)

Table of life expectancy

The following table shows life expectancy factors used for calculating the relevant number for males and females. The factors are based on the 1975 to 1977 life tables, published by the Australian Government Actuary.

The table relates to income streams with a commencement day on or after 1 July 1983 but before 1 September 1988. The age used refers to the age on the income stream's commencement day.

Age

M

F

Age

M

F

Age

M

F

15

56.06

62.82

44

29.20

34.94

73

8.82

11.53

16

55.10

61.85

45

28.32

34.03

74

8.35

10.90

17

54.16

60.88

46

27.44

33.11

75

7.91

10.29

18

53.24

59.91

47

26.58

32.21

76

7.48

9.70

19

52.35

58.95

48

25.73

31.31

77

7.07

9.13

20

51.47

57.98

49

24.88

30.42

78

6.68

8.59

21

50.57

57.01

50

24.05

29.53

79

6.31

8.07

22

49.66

56.04

51

23.23

28.65

80

5.95

7.58

23

48.74

55.07

52

22.42

27.77

81

5.62

7.11

24

47.82

54.09

53

21.62

26.91

82

5.30

6.67

25

46.89

53.12

54

20.83

26.04

83

5.00

6.25

26

45.95

52.15

55

20.06

25.19

84

4.72

5.86

27

45.01

51.18

56

19.30

24.34

85

4.45

5.49

28

44.07

50.20

57

18.55

23.51

86

4.21

5.15

29

43.13

49.23

58

17.82

22.68

87

3.99

4.83

30

42.18

48.26

59

17.10

21.85

88

3.79

4.54

31

41.24

47.29

60

16.40

21.04

89

3.61

4.27

32

40.29

46.62

61

15.71

20.24

90

3.45

4.02

33

39.35

45.35

62

15.04

19.45

91

3.31

3.79

34

38.40

44.39

63

14.39

18.66

92

3.19

3.59

35

37.46

43.43

64

13.75

17.89

93

3.09

3.41

36

36.52

42.47

65

13.13

17.13

94

3.01

3.25

37

35.59

41.51

66

12.53

16.38

95

2.94

3.11

38

34.66

40.56

67

11.95

15.65

96

2.88

3.00

39

33.73

39.61

68

11.38

14.93

97

2.83

2.90

40

32.81

38.67

69

10.84

14.22

98

2.77

2.82

41

31.90

37.73

70

10.31

13.52

99

2.72

2.77

42

30.99

36.79

71

9.79

12.84

100

2.67

2.72

43

30.09

35.87

72

9.30

12.18


Life expectancy tables

Section 10.5.7 [48]

More ? (go back) [272]

Relevant number

10.5.2/Asset Test Exempt Income Streams – Lifetime [236]

10.5.2/Asset Test Exempt Income Streams – Life Expectancy [237]

10.5.2/Asset Test Exempt Income Streams – Defined Benefit [29]

10.5.2/Asset Test Exempt Income Streams – Market Linked [238]

More ? (go back) [273]

Life expectancy is the length of time a person is expected to live and has the same meaning as 'life expectancy factor' under section 27H of the Income Tax Assessment Act 1936.

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

An income stream's relevant number is the length of time an income stream is paid for. It can be a fixed term or the life expectancy factor of the payee or reversionary beneficiary.

Pension Valuation Factors for Defined Benefit Income Streams

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Last amended: 13 May 2008

Description of pension valuation factors

The pension valuation factor [2] used depends on the:

  • indexation rate of the defined benefit income stream [2], and
  • age of the pensioner.

The indexation rates range from less than 1% to 8%. The pension valuation factors reduce as the age of the pensioner increases. Each factor covers an age range of 5 years:

  • starting at 20 years of age or less, and
  • finishing at the age ranges 96 to 100, and 100+.
Use of pension valuation factors

Pension valuation factors are used to determine the asset value of asset tested defined benefit income streams. However, under Commission determinations 10, 11 and 12 of 1998 and 5 and 6 of 1999, all defined benefit income streams are asset test exempt.

How to use the pension valuation factors

The following table shows how to select the appropriate indexation rate column from the pension valuation factor table.

Note: Where the income stream [2] is indexed at greater than 8% each year, the pension valuation factor will be determined by the Secretary of FaHCSIA [2].

If the income stream is indexed...

Then the pension valuation factor will be...

to movements in salary

listed in the 7% but less than 8% column of the following table.

to movements in a price index published by the Australian Government Statistician

listed in the 6% but less than 7% column of the following table.

at discretion of trustees of a super fund which has been in existence or has been making payments for less than a continuous period of five years

listed in the 6% but less than 7% column of the following table.

at discretion of the trustees of a super fund which has been in existence or has been making payments for more than a continuous period of five years

calculated by first adding together the indexation factors declared by the trustees over the past five years and then dividing the result by five to get the five year average. The relevant pension valuation factor will be listed in the column which corresponds to the five year average.

Pension valuation factor table

The following table shows the pension valuation factors for pensioners according to their age next birthday and the indexation rate for a pensioner's income stream.

Age

Indexation rate for person's income stream

8%

7% but less than 8%

6% but less than 7%

5% but less than 6%

4% but less than 5%

3% but less than 4%

2% but less than 3%

1% but less than 2%

Less than 1%

20 or less

34

27

22

19

16

14

12

11

10

21-25

32

26

22

18

16

14

12

11

10

26-30

30

25

21

18

16

14

12

11

10

31-35

28

23

20

17

15

13

12

11

10

36-40

26

22

19

16

14

13

11

10

9

41-45

23

20

17

15

14

12

11

10

9

46-50

20

18

16

14

13

11

10

9

9

51-55

18

16

14

13

12

11

10

9

8

56-60

15

14

12

11

10

10

9

8

8

61-65

12

11

11

10

9

8

8

7

7

66-70

10

9

9

8

8

7

7

6

6

71-75

8

7

7

7

6

6

6

5

5

76-80

6

6

5

5

5

5

4

4

4

81-85

4

4

4

4

4

4

3

3

3

86-90

3

3

3

3

3

3

3

2

2

91-95

2

2

2

2

2

2

2

2

2

96-100

2

2

2

2

2

2

2

2

2

101+

1

1

1

1

1

1

1

1

1


A factor used to calculate the notional asset value of a defined benefit income stream.

A defined benefit income stream is an income stream [2]  where the payments are not fully determined by a purchase price [2]. Instead, payments are made with reference to a set formula based on:

  • the person's salary before retirement,
  • years of service, and/or
  • the governing rules [2]of the income stream.

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

Department of Families, Housing, Community Services and Indigenous Affairs.   Now known as the Department of Social Services.

 

 

Payment Factors for Market Linked Income Streams

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Last amended: 3 September 2013

Use of payment factors

These payment factors are used in determining the annual payment [2] to be paid by a market linked income stream [2].

Rules determining the choice of payment factor

The following rules determine which payment factor is to be used:

  • for income streams commencing between 1 July and 31 December, the remaining term of the income stream is rounded down to the next whole number
  • for income streams commencing between 1 January and 30 June, the remaining term of the income stream is rounded up to the next whole number

 

This table prescribes which minimum payment factors to use based for the term of the income stream at its commencement day and then for the remaining term of the income stream on each 1 July thereafter.

 

Remaining term of income stream (years)

Payment factor

Remaining term of income stream (years)

Payment factor

70

26.00

35

20.00

69

25.91

34

19.70

68

25.82

33

19.39

67

25.72

32

19.07

66

25.62

31

18.74

65

25.52

30

18.39

64

25.41

29

18.04

63

25.30

28

17.67

62

25.19

27

17.29

61

25.07

26

16.89

60

24.94

25

16.48

59

24.82

24

16.06

58

24.69

23

15.62

57

24.55

22

15.17

56

24.41

21

14.70

55

24.26

20

14.21

54

24.11

19

13.71

53

23.96

18

13.19

53

23.80

17

12.65

51

23.63

16

12.09

50

23.46

15

11.52

49

23.28

14

10.92

48

23.09

13

10.30

47

22.90

12

9.66

46

22.70

11

9.00

45

22.50

10

8.32

44

22.28

9

7.61

43

22.06

8

6.87

42

21.83

7

6.11

41

21.60

6

5.33

40

21.36

5

4.52

39

21.10

4

3.67

38

20.84

3

2.80

37

20.57

2

1.90

36

20.29

1 or less

1.00

 

For the period commencing on 1 July 2008 and ending 30 June 2013, temporary relief measures were applied by the Government in response to the Global Financial Crisis to allow all account-based income stream recipients to elect to reduce their minimum annual payment to :

  • 50% of the required minimum payment for the period commencing 1 July 2008 and ending 30 June 2011; and
  • 75% of the required minimum payment for the period commencing 1 July 2011 and ending 30 June 2013.

These temporary relief measures ceased to apply from 1 July 2013.

Temporary relief was again applied over the period 1 July 2019 to 30 June 2022 in response to the Coronavirus pandemic.  Income stream recipients were able to elect to reduce their minimum annual payment to 50%  of the required minimum payment for the periodcommencing 1 July 2019 to 30 June 2022.


 

Annual payment means the amount payable to the person for the year under the income stream.

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 

Payment Factors for Allocated Income Streams

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Last amended: 3 September 2013

Use of payment valuation factors and percentage factors

These factors are used in determining the minimum and maximum payment limits for allocated income streams which are now commonly referred to as account based income streams. The relevant payment factor depends on the commencement day [2] of the income stream [2].

 

Commencement day

Table

Before 1 January 2006*

Table 1

From 1 January 2006 to 30 June 2007*

Table 2

From 1 July 2007

Table 3

* Table 3 applies to income streams with a commencement day before 1 July 2007 if the owner of the income stream elects for Table 3 to apply instead of Table 1 or Table 2 as appropriate.

Table 1 – Determining the payment valuation factor

This table prescribes which maximum and minimum payment factors to use based on the person's age in whole years on the commencement day of the income stream and then on each 1 July thereafter for income streams commencing before 1 January 2006.

 

Age

Maximum payment valuation factor

Minimum payment valuation factor

Age

Maximum payment valuation factor

Minimum payment valuation factor

41

10

24.3

71

6.2

13.1

42

10

24.0

72

5.8

12.6

43

10

23.7

73

5.4

12.2

44

10

23.4

74

4.8

11.7

45

10

23.1

75

4.3

11.3

46

10

22.8

76

3.7

10.8

47

10

22.5

77

3.0

10.4

48

10

22.2

78

2.2

10.0

49

10

21.9

79

1.4

9.5

50

9.9

21.5

80

1

9.1

51

9.9

21.2

81

1

8.7

52

9.8

20.9

82

1

8.3

53

9.7

20.5

83

1

7.9

54

9.7

20.1

84

1

7.5

55

9.6

19.8

85

1

7.1

56

9.5

19.4

86

1

6.8

57

9.4

19.0

87

1

6.4

58

9.3

18.6

88

1

6.1

59

9.1

18.2

89

1

5.8

60

9.0

17.8

90

1

5.5

61

8.9

17.4

91

1

5.3

62

8.7

17.0

92

1

5.0

63

8.5

16.6

93

1

4.8

64

8.3

16.2

94

1

4.6

65

8.1

15.7

95

1

4.4

66

7.9

15.3

96

1

4.2

67

7.6

14.9

97

1

4.0

68

7.3

14.4

98

1

3.8

69

7.0

14.0

99

1

3.7

70

6.6

13.5

100 or more

1

3.5

Table 2 – Determining the payment valuation factor

This table prescribes which maximum and minimum payment factors to use based on the person's age in whole years on the commencement day of the income stream and then on each 1 July thereafter for income streams commencing from 1 January 2006 to 30 June 2007.

 

Age

Maximum payment valuation factor

Minimum payment valuation factor

Age

Maximum payment valuation factor

Minimum payment valuation factor

41

12

25.3

71

8.0

14.6

42

12

25.0

72

7.6

14.2

43

12

24.8

73

7.2

13.7

44

12

24.5

74

6.7

13.3

45

12

24.2

75

6.2

12.8

46

12

24.0

76

5.7

12.3

47

12

23.7

77

5.1

11.9

48

12

23.4

78

4.5

11.4

49

12

23.1

79

3.8

10.9

50

12

22..8

80

3.1

10.5

51

11.9

22.5

81

2.3

10.0

52

11.8

22.2

82

1.4

9.6

53

11.8

21.8

83

1

9.1

54

11.7

21.5

84

1

8.7

55

11.5

21.1

85

1

8.3

56

11.4

20.8

86

1

7.9

57

11.3

20.4

87

1

7.5

58

11.2

20.1

88

1

7.2

59

11.0

19.7

89

1

6.9

60

10.9

19.3

90

1

6.6

61

10.7

18.9

91

1

6.3

62

10.5

18.5

92

1

6.0

63

10.3

18.1

93

1

5.8

64

10.1

17.7

94

1

5.5

65

9.9

17.3

95

1

5.3

66

9.6

16.8

96

1

5.1

67

9.3

16.4

97

1

4.9

68

9.1

16.0

98

1

4.7

69

8.7

15.5

99

1

4.5

70

8.4

15.1

100 or more

1

4.4

Table 3 - Determining the percentage factor

The following table describes which percentage factor to use depending on the person's age in whole years on the commencement day of the income stream and then on each 1 July thereafter.

 

Age

Percentage factor

Under 65

4

65 - 74

5

75 - 79

6

80 - 84

7

85 - 89

9

90 - 94

11

95 or more

14

 

For the period commencing on 1 July 2008 and ending 30 June 2013, temporary relief measures were applied by the Government in response to the Global Financial Crisis to allow all account-based income stream recipients to elect to reduce their minimum annual payment to :

  • 50% of the required minimum payment for the period commencing 1 July 2008 and ending 30 June 2011; and
  • 75% of the required minimum payment for the period commencing 1 July 2011 and ending 30 June 2013.

These temporary relief measures ceased to apply from 1 July 2013.

Temporary relief was again applied over the period 1 July 2019 to 30 June 2022 in response to the Coronavirus pandemic.  Income stream recipients were able to elect to reduce their minimum annual payment to 50%  of the required minimum payment for the periodcommencing 1 July 2019 to 30 June 2022.


 

 

The commencement day in relation to an income stream [2] is the first day of the period to which the first income stream payment relates. This is usually one instalment period before the date of the first income payment.

The commencement day cannot occur prior to:

  • when all of the capital which is to support the income stream is available to the income stream provider;
  • the day established as the commencement day in relation to the terms and conditions agreed between the income stream provider and the individual; and
  • in circumstances where the individual or their beneficiary becomes entitled to the income stream as per the terms and conditions, the time at which the entitlement to start the income stream arises.

Legislative reference:  subsection 5J(1) of the Veterans' Entitlements Act 1986.

 

 

According to subsection 5J(1) of the VEA [8], 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 as life insurance business by a life company registered under section 21 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 [8];

but does not include any of the following:

  • available money;
  • deposit money;
  • a managed investment;
    • an investment in a public unit trust;
    • an investment in an insurance bond;
    • an investment with a friendly society;
    • an investment in a superannuation fund;
    • an investment in an approved deposit fund;
    • an investment in an ATO small superannuation account;
  • a listed security;
  • a loan that has not been repaid in full;
  • an unlisted public security; 
  • gold, silver or platinum bullion; or
  • a payment of compensation in relation to a person's:
    • inability to earn, derive or receive income from remunerative work; or
    • total and permanent disability or incapacity.

 

 


Source URL (modified on 18/10/2014 - 7:53pm): https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams

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[7] https://clik.dva.gov.au/compensation-and-support-policy-library/part-12-compliance-and-obligations/121-recipient-obligations
[8] http://clik.dva.gov.au/legislation-library
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[24] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1052-description-income-streams
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[30] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn607
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[32] 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
[33] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn608
[34] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/101-ordinary-income/1017-income-other-sources/income-private-annuities
[35] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/102-assets/1024-assessing-personal-assets-and-investments/assessing-private-annuities
[36] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn609
[37] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/101-ordinary-income/1015-income-overseas-including-pensions-war-pensions-war-widowers-pension-and-restitution-payments/income-foreign-pensions
[38] https://clik.dva.gov.au/compensation-and-support-policy-library/part-3-income-support-eligibility/37-comparable-foreign-pension/375-assessment-comparable-foreign-pension-payments
[39] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn610
[40] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/101-ordinary-income/1017-income-other-sources/income-overseas-annuities
[41] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/102-assets/1024-assessing-personal-assets-and-investments/assessing-overseas-annuities
[42] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn611
[43] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn612
[44] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1053-general-provisions-assessing-income-streams/exemptions-income-stream-provisions
[45] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn613
[46] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1054-income-and-assets-assessment-income-streams
[47] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn614
[48] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1057-life-expectancy-tables-pension-valuation-factors-and-payment-factors
[49] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn615
[50] http://www.comlaw.gov.au/Series/C2004A03268
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[55] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn616
[56] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn617
[57] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn618
[58] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn619
[59] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn620
[60] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1053-general-provisions-assessing-income-streams/determining-what-proportion-asset-test-exempt-income-stream-exempt
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[69] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn623
[70] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn624
[71] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn625
[72] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn626
[73] https://clik.dva.gov.au/book/export/html/16469#ref-VEA_ftn1
[74] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn622
[75] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn623
[76] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn624
[77] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn625
[78] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1052-description-income-streams/asset-tested-income-streams
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[85] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn630
[86] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn628
[87] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn629
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[93] http://clik.dva.gov.au/glossary/foreign-superannuation-fund
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[99] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn635
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[101] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn634
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[107] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn636
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[113] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn640
[114] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn641
[115] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn642
[116] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn643
[117] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn644
[118] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn638
[119] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1054-income-and-assets-assessment-income-streams/assets-assessment-defined-benefit-and-purchased-income-streams
[120] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn639
[121] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn640
[122] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn641
[123] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn642
[124] https://clik.dva.gov.au/compensation-and-support-reference-library/overpayment-management-manual/ch-7-recovery-and-other-methods-finalising-debts
[125] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn643
[126] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn644
[127] https://clik.dva.gov.au/user/login?destination=node/16546%23comment-form
[128] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn645
[129] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn646
[130] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn645
[131] mailto:PAIS@dva.gov.au
[132] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn646
[133] https://clik.dva.gov.au/user/login?destination=node/16370%23comment-form
[134] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn647
[135] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn648
[136] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn649
[137] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn650
[138] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn651
[139] https://www.legislation.gov.au/Details/F2022L00413
[140] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn647
[141] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn648
[142] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn649
[143] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn650
[144] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn651
[145] https://clik.dva.gov.au/user/login?destination=node/16561%23comment-form
[146] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn653
[147] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn654
[148] https://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/911-compensation-recovery
[149] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn653
[150] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/103-business-structures-and-trusts
[151] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn654
[152] https://clik.dva.gov.au/user/login?destination=node/16537%23comment-form
[153] https://clik.dva.gov.au/user/login?destination=node/16369%23comment-form
[154] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn655
[155] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn656
[156] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn657
[157] clik://LEGIS/VEA/section 46V
[158] clik://LEGIS/VEA/section 46Y
[159] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn655
[160] clik://LEGIS/VEA/section 5H(8)
[161] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn656
[162] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn657
[163] https://clik.dva.gov.au/user/login?destination=node/16392%23comment-form
[164] https://clik.dva.gov.au/user/login?destination=node/16344%23comment-form
[165] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn658
[166] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn658
[167] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn659
[168] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn660
[169] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn660
[170] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn661
[171] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn662
[172] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn663
[173] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn663
[174] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn659
[175] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1057-life-expectancy-tables-pension-valuation-factors-and-payment-factors/payment-factors-allocated-income-streams
[176] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn661
[177] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1057-life-expectancy-tables-pension-valuation-factors-and-payment-factors/payment-factors-market-linked-income-streams
[178] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn662
[179] https://clik.dva.gov.au/user/login?destination=node/16348%23comment-form
[180] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn664
[181] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn664
[182] https://www.legislation.gov.au/Details/F2019L00846/Explanatory%20Statement/Text
[183] http://guides.dss.gov.au/guide-social-security-law/4/9/5
[184] https://clik.dva.gov.au/user/login?destination=node/16325%23comment-form
[185] https://clik.dva.gov.au/user/login?destination=node/16463%23comment-form
[186] https://clik.dva.gov.au/user/login?destination=node/16448%23comment-form
[187] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn665
[188] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn666
[189] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn667
[190] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn668
[191] http://www.actuaries.asn.au
[192] http://WWW.actuaries.asn.au
[193] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn665
[194] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn666
[195] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn667
[196] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn668
[197] https://clik.dva.gov.au/user/login?destination=node/16334%23comment-form
[198] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn669
[199] https://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/96-deprivation-income-and-assets
[200] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn669
[201] https://clik.dva.gov.au/user/login?destination=node/16470%23comment-form
[202] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn670
[203] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn671
[204] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn672
[205] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn673
[206] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn674
[207] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn670
[208] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn671
[209] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn672
[210] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn673
[211] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn674
[212] https://clik.dva.gov.au/user/login?destination=node/16435%23comment-form
[213] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn675
[214] https://clik.dva.gov.au/user/login?destination=node/16361%23comment-form
[215] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn676
[216] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn676
[217] clikpopup://DEF/Primary FLA income stream
[218] clikpopup://DEF/Secondary FLA income stream
[219] https://clik.dva.gov.au/user/login?destination=node/16453%23comment-form
[220] https://clik.dva.gov.au/user/login?destination=node/16351%23comment-form
[221] https://clik.dva.gov.au/user/login?destination=node/16503%23comment-form
[222] https://clik.dva.gov.au/user/login?destination=node/16511%23comment-form
[223] http://guides.dss.gov.au/guide-social-security-law/1/1/t/101
[224] https://clik.dva.gov.au/user/login?destination=node/16410%23comment-form
[225] https://clik.dva.gov.au/user/login?destination=node/16485%23comment-form
[226] https://clik.dva.gov.au/user/login?destination=node/16357%23comment-form
[227] https://clik.dva.gov.au/user/login?destination=node/16507%23comment-form
[228] https://clik.dva.gov.au/user/login?destination=node/16459%23comment-form
[229] https://clik.dva.gov.au/user/login?destination=node/78379%23comment-form
[230] clikpopup://DEF/Commencement day
[231] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn677
[232] clikpopup://DEF/Relevant number
[233] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn678
[234] clikpopup://DEF/Life expectancy
[235] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn677
[236] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1052-description-income-streams/asset-test-exempt-income-streams-lifetime
[237] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1052-description-income-streams/asset-test-exempt-income-streams-life-expectancy
[238] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1052-description-income-streams/asset-test-exempt-income-streams-market-linked
[239] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn678
[240] https://clik.dva.gov.au/user/login?destination=node/16378%23comment-form
[241] https://clik.dva.gov.au/user/login?destination=node/16451%23comment-form
[242] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn679
[243] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn680
[244] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn679
[245] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn680
[246] https://clik.dva.gov.au/user/login?destination=node/16473%23comment-form
[247] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn681
[248] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn682
[249] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn683
[250] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1057-life-expectancy-tables-pension-valuation-factors-and-payment-factors/table-life-expectancy-income-streams-commencement-day-or-after-01012005-31122009
[251] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn681
[252] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn682
[253] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn683
[254] https://clik.dva.gov.au/user/login?destination=node/16450%23comment-form
[255] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn684
[256] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn685
[257] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn684
[258] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn685
[259] https://clik.dva.gov.au/user/login?destination=node/16419%23comment-form
[260] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn686
[261] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn687
[262] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn686
[263] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn687
[264] https://clik.dva.gov.au/user/login?destination=node/16461%23comment-form
[265] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn688
[266] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn689
[267] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn688
[268] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn689
[269] https://clik.dva.gov.au/user/login?destination=node/16439%23comment-form
[270] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn690
[271] https://clik.dva.gov.au/book/export/html/16469#tgt-cspol_part10_ftn691
[272] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn690
[273] https://clik.dva.gov.au/book/export/html/16469#ref-cspol_part10_ftn691
[274] https://clik.dva.gov.au/user/login?destination=node/16332%23comment-form
[275] https://clik.dva.gov.au/user/login?destination=node/16367%23comment-form
[276] https://clik.dva.gov.au/user/login?destination=node/16483%23comment-form