Application to be allowed to commute all or part of an asset-test exempt income stream due to extreme financial hardship 108-05060110

There are limited circumstances where an asset-test exempt (ATE) income stream product may be commuted into a lump sum, either fully or partially, without losing the assets test exemption and the customer possibly incurring a debt. One of the circumstances is commutation to pay a hardship amount. The customer needs to be facing extreme financial hardship or unavoidable expenditure.

Under the Superannuation Industry (Supervision) Regulations 1994, a complying income stream purchased with superannuation money cannot be commuted to pay a hardship amount. A hardship amount can only be paid for income streams purchased with non-superannuation monies.

The Social Security Act requires a customer who wishes to commute all or part of an asset-test exempt (ATE) income stream on the grounds of extreme financial hardship to make an application in writing to Services Australia for approval. Services Australia will assess whether the customer meets the extreme financial hardship rules.

There are two forms to be completed:

• The customer is to complete the form 'Application to be allowed to commute all or part of an asset-test exempt income stream because of extreme financial hardship'. The customer should also supply any supporting evidence to verify their financial hardship and unavoidable expenditure.
• The Service Officer is to complete the form 'Referral and recommendation - application to be allowed to commute all or part of an asset-test exempt income stream because of extreme financial hardship'.

The Service Officer is to forward a copy the forms and supporting documentation to the Financial Industry and Network Support (FINS) Helpdesk for their recommendation as to whether the customer's proposed commutation meets the definition of hardship amount.

The Resources page contains a link to the forms used to determine whether a customer meets the extreme financial hardship rules.