Assessing lifetime income streams paid from Self Managed Superannuation Funds (SMSF) or Small APRA Superannuation Funds (SAF) 108-05060080

For Complex Assessment Officer (CAO) use only

This document outlines how to assess lifetime income streams paid from Self-Managed Superannuation Funds (SMSF) or Small APRA Superannuation Funds (SAF), which were formerly known as 'Do-It-Yourself funds' or 'Excluded Funds'.

Step	Action
1	CAO referral + Read more ... $\\INTERNAL.DEPT.LOCAL\Shared\NAT\SERDELEXCEL\WORKPRODIMP\Operation Blueprint Migration\RDT Release Icons\32w\icon-specialists.png$ For Complex Assessment Officer (CAO) use only The CAO referral needs to be done using either: Process Direct - Referrals Customer First - CAO Referral guided procedure If the Service Officer did the referral without using one of the above options. Tell the Service Officer to refer back to CAO using one of the correct options.
2	Check the Details of Income Stream Product form (SA330) for the following + Read more ... Question 26 - If the income stream does not meet all the characteristics required under section 9A of the Social Security Act, go to Step 3 Question 10 - If provider indicates a lifetime income stream, go to Step 4
3	SA330 indicates income stream is not asset test exempt + Read more ... This income stream is not compliant with Section 9A of the Social Security Act. Return case to the Service Officer. Record details on a DOC. Procedure ends here.
4	Check documentation + Read more ... Cross check all of the source documentation (that is Trust Deed/Contract/Trustee Resolution/Minutes/Agreements, etc.) to ensure that: the trust deed allows for payment of the relevant pension the income stream details provided in all documentation is uniform and correct Documentation must be checked for compliance with Section 9A of the Social Security Act. All requirements for compliance must be binding on the trustee that is the evidence provided to support each condition of compliance must be legally enforceable.
5	Is there a guarantee period specified in the documentation, for example will the income stream continue to pay a benefit for a specified period following the death of the primary beneficiary? + Read more ... Yes, go to Step 6 No, see Step 1 in the Payments from a lifetime income stream products table
6	Check if the commencement date of the income stream is prior to 20 September 2004 + Read more ... Yes, go to Step 8 No, go to Step 7
7	Is the commencement date of the income stream on or after 20 September 2004 and before 1 January 2006? + Read more ... Yes, see Step 1 in the Payments from a lifetime income stream products table No, go to Step 8
8	Check if income stream has been purchased using proceeds from the commutation from another income stream. + Read more ... SMSFs and SAFs are not permitted under the Superannuation Industry (Supervision) Act 1993 to offer compliant lifetime income streams on or after 1 January 2006. There are exceptions. For more information about eligibility criteria and conditions for relief, see the References page. Has the income stream been purchased using the proceeds from the commutation of another ATE income stream and is it eligible to retain asset test exemption? Yes, see Step 1 in the Payments from a lifetime income stream products table No, the income stream is not compliant. Refer file back to the Service Officer and record details on a DOC

Payments from a lifetime income stream products

Table 2: This table is about the payments made from a lifetime income stream.

Step	Action
1	Is the specified guarantee period more than 10 years from the date of commencement, or is the specified guarantee period more than the lesser of the primary beneficiary's life expectancy or 20 years? + Read more ... $\\INTERNAL.DEPT.LOCAL\Shared\NAT\SERDELEXCEL\WORKPRODIMP\Operation Blueprint Migration\RDT Release Icons\32w\icon-specialists.png$ For Complex Assessment Officer (CAO) use only Yes, then the income stream is not compliant. Refer file back to the Service Officer and record details on a Note/DOC. Procedure ends here No, go to Step 2
2	Are the payments from the income stream paid at least annually? + Read more ... Yes, go to Step 3 No, then the investment is not an income stream and should be assessed as a managed investment. Refer file back to the Service Officer and record details on a Note/DOC. Procedure ends here
3	Will the income stream make payments until the death of the primary beneficiary and if there is a nominated reversionary beneficiary(s), until the death of the last surviving reversionary beneficiary? + Read more ... Yes, go to Step 4 No, then the income stream is not compliant. Refer file back to the Service Officer and record details on a Note/DOC. Procedure ends here
4	Was the total amount paid by the income stream in the first year specified in the documentation? + Read more ... Yes, go to Step 5 No, then the income stream is not compliant. Refer file back to the Service Officer and record details on a Note/DOC. Procedure ends here
5	Will the total amount of payments in a year be less than what was paid in the previous year, other than as a result of the following causes? + Read more ... A reduction in payments resulting from an allowable commutation A reduction in payments resulting from death of a joint owner Yes, then the income stream is not compliant. Refer file back to the Service Officer and record details on a Note/DOC. Procedure ends here No, go to Step 6
6	Can the total amount of payments in a year be more than what was paid the previous year, other than as a result of indexation? + Read more ... Yes, then the income stream is not compliant. Refer file back to the Service Officer and record details on a Note/ DOC. Procedure ends here No, go to Step 7
7	If the income stream allows for the indexation of payments, can the payments be indexed by more than the greater of 5% or CPI + 1? + Read more ... Yes, then the income stream is not compliant. Refer file back to the Service Officer and record details on a Note/DOC. Procedure ends here No, go to Step 8
8	Did the first payment relate to the period commencing on the day that the income stream was purchased or acquired that is the first payment was not deferred? + Read more ... Yes, go to Step 9 No, then the income stream is not compliant. Refer file back to the Service Officer and record details on a Note/DOC. Procedure ends here
9	Are there any amounts to be paid from the income stream other than the regular payments for example a residual capital value (RCV)? + Read more ... Yes, then the income stream is not compliant. Refer file back to the Service Officer and record details on a Note/DOC. Procedure ends here No, see Step 1 in the Transfer and commutation provisions and actuarial certificate table

Transfer and commutation provisions and actuarial certificate

Table 3: This table describes allowable commutations and what information on the actuarial certificate needs to be checked by the CAO.

Step	Action
1	Does the documentation allow for the income stream to be transferred to someone other than a reversionary beneficiary and only on the death of the primary beneficiary or another reversionary beneficiary? + Read more ... $\\INTERNAL.DEPT.LOCAL\Shared\NAT\SERDELEXCEL\WORKPRODIMP\Operation Blueprint Migration\RDT Release Icons\32w\icon-specialists.png$ For Complex Assessment Officer (CAO) use only Yes, then the income stream is not compliant. Refer file back to the Service Officer and record details on a Note/DOC. Procedure ends here No, go to Step 2
2	Can the income stream be commuted in circumstances other than: + Read more ... Within the first six months following the commencement day where the income stream is non commutation funded Where it is rolled to another ATE income stream To pay the superannuation contribution surcharge or a hardship amount To the extent necessary to pay the person's partner or former partner under a payment split due to a property settlement on relationship breakdown, or Within the guarantee period to a reversionary beneficiary or the estate of the primary beneficiary on the death of the primary beneficiary Yes, then the income stream is not compliant. Refer file back to the Service Officer and record details on a Note/DOC. Procedure ends here No, go to Step 3
3	Can the income stream be used as security for borrowing? + Read more ... Yes, then the income stream is not compliant. Refer file back to the Service Officer and record details on a Note/DOC. Procedure ends here No, go to Step 4
4	If the income stream is commuted or transferred on the death of the primary beneficiary, can the amount paid be greater than the net present value of the remaining payments immediately prior to the commutation or transfer? + Read more ... Yes, then the income stream is not compliant. Refer file back to the Service Officer, complete Note/DOC. Procedure ends here No, go to Step 5
5	Has the customer supplied an actuarial certificate? + Read more ... Yes, go to Step 6 No, the process cannot continue as it is a requirement of Section 9A of the Social Security Act that an 'in force' actuarial certificate be supplied. Refer file back to Service Officer and record details on a Note/DOC
6	Does the actuarial certificate provide the following? + Read more ... The specified 'in force' period of the certificate of not more than 12 months duration A statement that the SMSF or SAF has high probability it can meet the income stream payments specified under the contract or governing rules Yes, go to Step 7 No, the income stream is not compliant. Refer file back to Service Officer and record details on a Note/DOC. Procedure ends here
7	Is the actuarial certificate + Read more ... Current within the 'in force' period, or Within the grace period of 26 weeks following the end of the 'in force' period Yes, go to Step 8 No, then income stream is not compliant. Refer file back to Service Officer and record details on a Note/DOC. Procedure ends here
8	Return of purchase price + Read more ... The purchase price must be returned as income over the customer's life expectancy for lifetime products. If the calculated figure is equal to or higher than the purchase price of the income stream, the income stream meets the 'return of purchase price' requirement for an asset-test exempt (ATE) income stream If the calculated figure is lower than the purchase price of the income stream, the income stream does not meet the 'return of purchase price' requirement for an ATE income stream. Therefore the income stream product cannot be assets test exempt and should be assessed as an asset-tested (long term) income stream. Contact the FINS Helpdesk to check accuracy of the calculated figure and before any re-assessment An approximate calculation for the return of purchase price is based on the term of the income stream product multiplied by the gross annual income amount of the income stream product. If assistance is required with the calculation or the result, contact the Financial Industry and Network Support (FINS) Helpdesk, via the online form. See Resources. Go to Step 9
9	Return file to Service Officer, with details of recommendation regarding the assessment of the asset-test exempt income stream from the SMSF or SAF to the Service Officer for action + Read more ... Complete the recommendation on the Complex Assessment Officers (CAOs) Report, which can be generated by the 'CAO Report Writer' script while in the customer's record. Record details on a Note/DOC.

Operational Information

Assessing lifetime income streams paid from Self Managed Superannuation Funds (SMSF) or Small APRA Superannuation Funds (SAF) 108-05060080

On this page:

Checking income stream product documents

Payments from a lifetime income stream products

Transfer and commutation provisions and actuarial certificate