VEA → [2]
Section 5J
An income stream [3] 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:
Investments referred to as income streams may be known by the following names:
Income streams are classified into the following assessment categories, each of which are assessed under different rules:
An income stream can only be asset-test exempt if it is a defined benefit income stream [3], or meets all of the following criteria:
More → [5]Asset-tested income streams are income streams:
and are either:
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 → [7]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).
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 → [8]
An income stream is not:
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 → [13]
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 → [14]
Life expectancy [3] tables are used to determine the relevant number [3] for income streams. The commencement day [3] of the income stream determines which life expectancy table to use.
More → [15]
Section 5J
An income stream [3] 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:
Actuarial Certificate
10.5.5/Additional Documentation Required from Self managed Superannuation Funds and Small APRA Funds [19]
Income from Overseas Pensions
10.1.5/Income from Foreign Pensions [29]
Assessment of Comparable Foreign Pension Payments
Section 3.7.5 [30]
Income from Overseas Annuities
10.1.7/Income from Overseas Annuities [32]
Assessment of Overseas Annuities
10.2.4/Assessing Overseas Annuities [33]
Gaining an exemption from the income stream provisions
10.5.3/Exemptions from the Income Stream Provisions [37]
Assessment of the different categories of income streams under the income and assets tests
Section 10.5.4 [39]
According to subsection 5J(1) of the VEA [43], an income stream includes:
but does not include any of the following:
An income stream is an asset-test exempt income stream if it is purchased before 20 September 2007 and must be:
and:
Legislative reference:
Veterans' Entitlements Act 1986:
An income stream is an asset-tested long term income stream if it is:
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:
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:
Legislation: subsection 5J(1) Veterans' Entitlements Act 1986
A defined benefit income stream is an income stream [3] where the payments are not fully determined by a purchase price [3]. Instead, payments are made with reference to a set formula based on:
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) [43]of the VEA [43]
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 [3].
An income stream is an asset-tested long term income stream if it is:
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) [43] of the VEA a financial asset means;
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:
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 [43].
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 [3] 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:
Legislative reference: subsection 5J(1) of the Veterans' Entitlements Act 1986.
According to subsection 5J(1) of the VEA [43], an income stream includes:
but does not include any of the following:
Links
[1] https://clik.dva.gov.au/user/login?destination=node/16495%23comment-form
[2] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn602
[3] https://clik.dva.gov.au/%23
[4] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn603
[5] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn604
[6] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn605
[7] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn607
[8] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn608
[9] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn609
[10] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn610
[11] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn611
[12] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn612
[13] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn613
[14] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn614
[15] https://clik.dva.gov.au/book/export/html/16495#tgt-cspol_part10_ftn615
[16] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1052-description-income-streams
[17] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn603
[18] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn604
[19] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1055-special-provisions-regarding-self-managed-superannuation-funds-and-small-apra-funds/additional-documentation-required-self-managed-superannuation-funds-and
[20] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn605
[21] 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-defined-benefit
[22] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn607
[23] https://clik.dva.gov.au/compensation-and-support-policy-library/part-10-types-income-and-assets/105-income-streams/1052-description-income-streams/family-law-affected-income-streams
[24] 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
[25] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn608
[26] 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
[27] 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
[28] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn609
[29] 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
[30] 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
[31] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn610
[32] 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
[33] 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
[34] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn611
[35] https://clik.dva.gov.au/compensation-and-support-policy-library/part-9-principles-determining-pension-rate/95-deeming-provisions
[36] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn612
[37] 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
[38] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn613
[39] 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
[40] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn614
[41] 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
[42] https://clik.dva.gov.au/book/export/html/16495#ref-cspol_part10_ftn615
[43] http://clik.dva.gov.au/legislation-library
[44] http://www.comlaw.gov.au/Series/C2004A03268