Adding or updating a term income stream 108-05060050

Before starting the update, check where the money came from to buy the income stream. For example, the customer used money in a savings account or a superannuation account recorded on the Managed Investments Summary (MIS, MIP, MIUS) table. If so, update these other assets.

The Income and Assets Update workflow from the Task Selector in Process Direct can be used to update income streams:

• In Process Direct via Customer Summary, access the customers record
• Key START into the Super key
• Select the Income and Assets Update workflow from Task Selector
• Select Income Streams (SUPS/SUPI/SUPV)
• Select Start

Note: any additional income and assets types required for the update being completed can be selected from the Income and Assets Update Task Selector at the same time.

To update, use the following information:

Select Add to access the Create Income Streams (SUPS/SUPI/SUPV) screen.

Code the Income Stream Details:

• Product Type:
  • 'TIS - TERM INCOME STREAM'
• Income stream from SMSF/SAF?:
  • 'No', term income streams cannot be paid from a Self-Managed Superannuation Fund (SMSF) or a Small APRA Fund (SAF)
• Provider or SMSF/SAF Name:
  • For SMSF/SAF only: enter the name of the self-managed superannuation fund manually. Do not code the names of financial planners or accountants
  • For non-SMSF: select the appropriate Provider name from the drop-down list. Beginning to type part of the name will reduce the options. Note: the provider name may not be an exact match to the schedule. If a fund does not appear in the provider/fund name list in the first instance, please refer to FINS Bulletin page Successor Fund Transfer (SFT) page. If still unable to locate, refer to LPS for support as per normal BAU processes
• Provider or SMSF/SAF ABN:
  • For SMSF/SAF only, enter the fund’s Australian Business Number
  • For non-SMSF/SAF: this will auto-populate. Note: the ABN may not match the schedule
• Product Name:
  • for joint income streams, include the term 'jointly owned' to identify the product as a jointly owned income stream
  • for non-jointly owned income streams, use the name of the income stream product as stated on the schedule
• Product Reference Number:
  • the product reference number is unique to each income stream and may be shown as the product reference number, account number or policy number on the schedule
  • record reference number exactly as it appears on the schedule
  • do not code the provider ABN or product name as the product reference number
• Event Date/Commencement Date:
  • Same as purchase date
  • Note: this is not the ‘event date’ as indicated by the field title. The ‘event date’ is addressed later
• Purchase Date:
• purchase date of the income stream as stated on the schedule

• Term or Relevant Number:
  • as stated on the schedule
  • it is the length of time for which the income stream is payable
  • if it is not provided on the SA330, or is incorrect, contact the provider to obtain the correct number or request customer to obtain correctly completed schedule from the provider
  • the Relevant Number is the fixed term of the product and must be a whole number
  • it must always be the number that applied at the commencement date and must not be changed following reversion to a reversionary partner or beneficiary

• Section 9A/B/BA/BB Compliant Indicator:
  • code 'No'
• Start Date Original Commuted Product:
  • leave blank
• Product Cancellation Reason:
  • leave blank when adding new income stream
  • Note: if the product is fully commuted, cancel the income stream
    Do not delete. If the product is cancelled, it stops being assessed under income and assets test.
    If the product is being cancelled, use Edit to access the Change Income Stream (SUPS/SUPI/SUPV) screen and code the cancellation reason. This will generate an automatic '0' date of event on the Income Stream Details item line. Edit this line to adjust the Event Date field to the correct date of event (DOV)

Select the date for the Event Date field using the following information.

Note: an additional Event Date(s) may be needed for some new income streams. These will be added after the first page is complete. More information is provided later as it is needed.

Reversionary beneficiary:

• The Event Date is the day after the date of death of the primary beneficiary (usually the deceased partner), which is the date the customer (reversionary) is entitled to the income stream payment
  Note: this date is displayed on the Marital Status (MS) screen
• Assessable income from the income stream includes:
  • any lump sum arrears, and
  • regular ongoing payments
• The income stream is assessed from this date even though other income and assets are assessed at the end of the 16 week bereavement review where the customer does not advise the changes before the review
• Waiver provisions effective from 9 May 2018:
  • Where the assessment of lump sum arrears result in a debt during the bereavement period for the surviving spouse waiver provisions may apply. They are in Class of Debt, Section 1237AB(1) of the Social Security Act 1991. See the References page for a link
  • All conditions in the legislation must be met
  • These waiver provisions cannot be used to waive debts outside the 14 week bereavement period, or debts which occurred before 9 May 2018
  • If there is a debt that might be able to be waived, record the details on a NOTE. Debt Staff will make a decision when the debt is assessed

New claim

The Event Date will be the:

• date the income stream was purchased where the:
  • customer has a partner who is current on an ISP, RCA or LIC before the purchase date, or
  • income stream was purchased after the date of grant of the payment
  • income stream was purchased after the lodgement of an early claim
• lodgement date for an early claim
• the commencement date of the 8 week assessment period for LIC
• payment grant date in all other cases

Purchase of new income stream by existing customer

• The Event Date is the purchase date of the product

• Channel Type:
  • no update needed
  • system displays whether the income stream was manually updated by staff or auto bulk updated with data sent by the provider (ISP)
• Gross Income Amount:
  • code exactly as shown on the schedule (including cents, if stated)
  • do not convert to an annual amount unless specified on the schedule
  • for joint income streams, halve the amount shown on the schedule
• Income Frequency:
  • code the frequency of payment
  • the system uses this field to make automatic updates to the asset value of some income streams

• Residual Capital Value:
  • code the amount that will be returned to the income stream owner as a lump sum at the end of the income stream term, coded as whole dollars only
  • for joint income streams, halve the amount shown on the schedule
• Original Purchase Price:
  • code amount originally paid for the income stream, not reduced by any commutations
  • code exactly as stated on the schedule (including cents, if stated)
  • for existing products, if there is a whole dollar discrepancy, the product must be cancelled with cancellation reason 'OTH' and recoded
  • for joint income streams, halve the amount shown on the schedule
• Commutation Date:
  • code the date of the latest commutation
  • this date is only for information and is not the date of effect
• Latest Commutation:
  • code the most recent commutation amount
• Purchase Price Less Commutations:
  • the system displays original purchase price less total commutations made
• Previous Commutations:
• system displays total commutations made up to the current date
• Other Deduction Type:  Possible codes:
  • Blank – use if no other deductions allowed
  • ‘F’ – Family Law Split (FLS)
  • ‘S’ – Special Rate Disability Pension (SRDP) – not applicable for TIS products so should not be selected
  • ‘B’ – Code if customer has both SRDP and FLS reductions - not applicable for TIS products so should not be selected
• Other Deduction Amount:
  • This field will not display if ‘other Deduction Type’ is not selected
  • Family Law Split (FLS) - Depending on the agreement or court order involved, it is possible the provider has split the income stream and is only paying the customer their remaining share. For those cases no additional reduction is required. However, if the provider was unable to split the payment, then the amount the customer must legally pay to the other party can be coded under ‘other deduction amount’ to reduce the gross income assessed. The amount coded in this field must match the frequency used for the income coded e.g. if income is coded as a monthly figure this field must be coded with the monthly amount allowable deduction. For example: it may be a set amount of $10,000 per year or could be 20% of the gross and if required needs to be converted to the frequency used for coding the income. See References for link to relevant instructions.  This information needs to be included in the DOC when updates are finalised.
  • Note: If the product is assessed as a Category 3 Asset Tested (Short term) Income Stream this field will not apply any reduction as the assessable asset will be subject to deeming.

• If the income stream is not indexed, go to Step 9
• Category 3 Assets Tested (Short Term) Income Stream:
  • Indexation fields will not display
  • Go to Step 9

In all other cases, if the Event Date is historical, additional Event Date(s) will be needed. The indexation fields are completed on the last, (most recent) Event Date.

• For asset reassessment historical means:
  • more than 6 months in the past if the payment frequency is less than annual, or
  • more than12 months in the past if the payment frequency is annual, or
  • the Event Date is before the date the income stream is added to the customer's record
• For income assessment historical means:
  • the payment is indexed, and
  • the Event Date is more than 12 months in the past

Is the Event Date historical?

• Yes:
  • do not code the indexation fields at this point
  • make a note additional Event Date(s) will be needed before the update can be finalised
  • go to Step 9
• No, go to Step 8

Code indexation information for Category 2 Assets Tested (Long Term) Income Streams.

• Indexation Method:
  • The indexation method will be stated on the schedule
  • If payment is indexed, indexation details must be coded for review of the gross income
  • If 'FIX - Indexed by a fixed % on a fixed date', the system will auto increase the income amount by the percentage coded in the Indexation Percent field on the date specified in the Next Indexation Date field
  • If 'CPI - Consumer Price Index' is coded, the system will send out a letter to the income stream owner requesting their new gross income and frequency of payment
• Next Indexation Date:
  • For CPI indexed income streams, this is usually the anniversary of the purchase date. It is not 1 year from the Event Date (date of receipt of requested information) or the date when the income is updated
  • Input the date as included in the schedule. Note: if the income stream is from a SMSF or SAF and the indexation date reported is 1 July, it can be accepted
  • If this date is blank in the schedule, input the next anniversary of the purchase date
• Indexation Percent:
  • Code only if Indexation Method: is FIX - Indexed by a fixed % on a fixed date
  • If the indexation rate is greater than 5% the product cannot be section 9A/B/BA/BB compliant

The remaining fields needed for the Superannuation Payment Details are automatically completed by the system:

• Select Save once updates made
• Update Receipt Date, Channel Service Reason (if required) and select Save
• Check the Income Streams (SUPS, SUPI, SUPV) table displays the updated income stream details. Select relevant to the product from the Income Streams (SUPS, SUPI, SUPV) table and select edit on the item level provisional update to access the Change Income Stream Details screen

Check the additional coding now appears:

• Deductible Amount (Income): - system calculated:
• deduction amount for an asset-tested (long term) income stream (category 2) by which the gross income amount is reduced to determine assessable income
• zero for an asset-tested (short term) income stream (category 3) as these are subject to deeming under the income test. The deemed income displays on the Financial Investment Summary (IVIS) screen
• Deductible Assets Amount:
  • system calculates and displays the deduction amount
  • it is used, with the term elapsed, to determine the assessable asset amount
• Term Elapsed (Years):
  • annual, the term elapsed is calculated in increments of whole years. If not annual, the term elapsed is calculated in increments of 0.5 years
  • system displays the period elapsed since the commencement date
  • this is used with the deductible amount (assets) to calculate the assessable asset amount for asset-tested (product category 2) and partially asset-test exempt (category 6) income streams
  • if gross income frequency is annual, calculate the term elapsed in increments of whole years. If not annual, the term elapsed is calculated in increments of 0.5 years
• Assessable Income Amount:
  • system calculated
  • gross income amount - deductible amount (income) for asset-tested (long term) income stream (category 2)
  • no value for asset-tested (short term) income streams (category 3) as these are subject to deeming under the income test
• Assessable Asset Amount:
  • the system calculates and displays the assessable asset amount
  • this amount is included on the IVIS screen under Income Stream Cat3 and added to other financial investments for calculation of deemed income
• Product Category: No update needed. The system auto displays either:
  • Assets Tested (Long Term) Income Stream
  • Assets Tested (Short Term) Income Stream

Select Cancel to close the Superannuation Payment Details for the next part in the update.

Historical Event Date

• For asset reassessment historical means:
  • more than 6 months in the past if the payment frequency is less than annual, or
  • more than12 months in the past if the payment frequency is annual, or
  • the Event Date is before the date the income stream is added to the customer's record
• For income assessment historical means:
  • the payment is indexed, and
  • the Event Date is more than 12 months in the past

Is an additional Event Date(s) needed because the income stream is being added to the customer record and the Event Date is historical?

• Yes, go to Table 3 > Step 1
• No, go to Step 11

• Check the Income Streams (SUPS, SUPI, SUPV) table displays the updated income stream details
• Select Assess
• Check the payment outcome on Entitlements (ELD) screen and select Finish
• If the Service Officer has used the Process Direct Income and Assets workflow, NOTES will be prepopulated automatically and display for review when Finish is selected
• At this point, any additional information can be added, as per Online Document Recorded (ODR)

Once NOTES are complete, Finalise. The transaction will complete and NOTES replicate to the Document List (DL).