Income streams 108-05060000

An income stream:

• is a regular series of payments
• may be made for as long as the customer's (or their partner's) life or for a fixed term
• may be purchased with a lump sum or made directly from accumulated superannuation contributions

There are four broad assessment categories for income streams.

Asset-test exempt (ATE)

The type of income stream and its start date are important in determining asset test exemption.

Defined benefit income streams will be 100% asset test exempt regardless of the start date.

Other income streams which meet the characteristics as set out in section 9A, 9B or 9BA of the Social Security Act 1991 are asset test exempt. If the income stream was purchased:

• before 20 September 2004 it will continue to be 100% asset test exempt
• from 20 September 2004 and before 20 September 2007 and it meets the characteristics for assets test exemption, it will be 50% asset-test exempt
• on or after 20 September 2007, it is fully asset tested. Exceptions apply:
• some lifetime and life expectancy ATE income streams can retain a 100% or 50% asset test exemption (whichever is applicable), and market-linked ATE income streams can retain their 50% asset test exemption
• IF the original ATE income stream was purchased before 20 September 2007, and is commuted and rolled over on or after 20 September 2007 into new ATE income streams which meets certain conditions. The References page contains more information on eligibility criteria and conditions

Note: military invalidity pension income streams are 100% asset test exempt regardless of the start date. Until a system release is available, they must be coded as defined benefit income streams.

Asset-tested (long term)

The term is

• more than 5 years, or
• less than 5 years only if the term is equal to or greater than the customer's life expectancy at the time of purchase

This category also includes lifetime income streams with a purchase date before 1 July 2019.

Asset-tested (short term)

The term is 5 years or less. This income stream category is deemed under the income test.

Asset-tested (lifetime)

This category includes lifetime income streams with a purchase date on or after 1 July 2019.

For assessment purposes, income streams are categorised as follows on the system:

• Product Category 1 (Assets Test Exempt Income Stream)
• Product Category 2 (Assets Tested (Long Term) Income Stream)
• Product Category 3 (Assets Tested (Short Term) Income Stream)
• Product Category 4 (Assets Test Exempt Defined Benefit Income Stream)
• Product Category 5 (Assets Tested Defined Benefit Income Stream)
• Product Category 6 (Partially Assets Test Exempt Income Stream)
• Product Category 7 (Partially Assets Test Exempt Market-Linked Income Stream)
• Product Category 8 (Asset Tested Market-Linked Income Stream)
• Product Category 9 (Asset Tested (Long Term) Deemed Income Stream) - effective from 1 January 2015
• Product Category 10 (Asset Tested Income Stream (lifetime)) - effective from 1 July 2019
• Product Category 11 (Asset Tested Deemed Income Stream (Lifetime)) - effective from 1 July 2019

The names and features of some income streams are similar. It is important to identify the income stream correctly because they may be assessed differently.

Types of income streams include:

• Account-based income stream:
• also known as Allocated pension or account-based pension
• product type code AIS
• codes ALA and ALP can no longer be used to add new products. Existing current products with that code can be updated
• Market linked income stream
• also known as Term Allocated Pension
• product type code MLI
• take care not to confuse it with an allocated pension, an account based income stream or a life expectancy income stream
• Lifetime income stream
• product type code LIS (purchased before 1 July 2019)
• codes ANL, ARL, ARP, can no longer be used to add new products. Existing current products with those codes can be updated
• take care not to confuse it with a defined benefit income stream, military invalidity pension income stream, or a life expectancy income stream
• Life Expectancy income stream
• product type code LIE
• codes ANN, ARS, ART can no longer be used to add new products. Existing current products can be updated
• take care not to confuse it with a term income stream or a market-linked income stream
• Term income stream
• product type code TIS
• codes ANN, ARS, ART can no longer be used to add new products. Existing current products can be updated
• take care not to confuse it with a life expectancy income stream
• this is not a complying income stream and will be fully asset tested
• Defined benefit income stream
• product type code DEF
• code OTD cannot be used to add or update existing products. The product must be cancelled and re-coded
• includes military invalidity pension income streams
• Pooled lifetime income streams
• product type code LPS (purchased using superannuation money)
• product type code LPO (purchased using non superannuation money)
• purchased on or after 1 July 2019

The income stream provider must provide details of the income stream on a Details of Income Stream product (SA330) or a similar schedule.

If an income stream is from a Self Managed Superannuation Fund (SMSF) or Small APRA Superannuation Fund (SAF):

• the form should be completed by the trustee of the fund (generally the customer for an SMSF)
• the trustee may receive assistance from their accountant or financial adviser, however, an income stream schedule completed by a financial advisor must not be accepted
• some SMSFs may have a retail provider such as AMP, MLC, etc. as their administrator who may complete the form

Overseas income streams:

• are not assessed under income stream rules
• do not meet the definition of an income stream under section 9(1) of the Social Security Act
• are assessed as foreign income and assets and recorded on the Foreign Income/ Asset Detail (FID) screen

For more details, see Foreign income and assets.