Commutation of asset-tested income streams 108-05060130

A commutation is:

• a lump sum withdrawal in cash from an income stream, or
• directly rolled over (transferred) to another income stream

A commutation can be a:

• full commutation. All funds have been taken out of the income stream and it has been closed
• partial commutation. Some of the funds have been taken out of the income stream but it still has a balance and remains open

Is the customer advising about a partial commutation as part of their August review for income streams from a Self-Managed Super Fund (SMSF)?

• Yes, see August income stream reviews
• No
• Access the customer’s record via Customer Summary
• Check the Product type and the Product Category fields by expanding the income stream details on the Income Stream (SUPS/SUPI/SUPV) screen
• Select Edit and check the Assessable Asset amount field
• Go to Step 2

If the income stream is:

• Account based, Product Category 9 (deemed). All category 9 income streams are asset tested. Partial commutations are not recorded. The current account balance is updated after a commutation. If the update is a:
• partial commutation, go to Step 9
• full commutation, go to Step 6
• Market linked (MLI), Product Category 7 only
• A commutation can only be made in very limited circumstances
• Determine whether the commutation is allowable or not
• See Commutation of asset-test exempt (ATE) income streams

See Resources page for a link to the Online Query Form. Procedure ends here

• Another income stream, including MLI Product Category 8:
• Check if it is asset tested, go to Step 3

An income stream is asset tested if it does not comply with Sections 9A, 9B, 9BA, or 9BB of the Social Security Act.

To check:

• From the Income Stream (SUPS/SUPI/SUPV) screen check the Section 9A/B/BA/BB field. If the field has:
• 'N', the product is asset tested
• 'Y', the product is fully or partially asset-test exempt

Is the income stream asset tested, (the indicator is N)?

• Yes, go to Step 4
• No:
• See Commutation of asset-test exempt (ATE) income streams
• Procedure ends here

Discuss all income and asset updates the customer would like to make during their contact. For example, what has been done with the funds from the commutation, or if there are other income and asset changes.

If there are concerns with the legitimacy of the customer’s information, see Coding income and assets for Centrelink payments and services.

If the customer is advising about a:

• partial commutation, go to Step 5
• full commutation, go to Step 6

If the amount commuted is more than $20,000, ask the customer what has happened to the funds. Ask for any supporting documents needed to code new assets purchased.

Documents needed for a partial commutation:

• A Details of income stream product form (SA330) or
• similar schedule, completed by the provider, including the:
• details of the commutation, and
• account balance as at the date of the commutation

The Resources page contains a link to the SA330 form.

Can the customer provide the information needed?

• Yes, go to Step 7
• No:
• more information or documents will be needed
• go to Step 8

A change to the Provider Name and/or ABN may indicate a transfer of the product between providers, known as a Successor Fund Transfer (SFT) rather than a commutation and rollover. Refer to the FINS Bulletin for a listing of SFT/Intra Funds Transfers (IFTs). If it is an SFT, see Adding or updating an account-based income stream.

If it is not an SFT, is the current account balance as recorded on the customer's record less than $5,000?

• Yes:
• Evidence is not needed
• Go to Step 7
• No:
• Evidence of full commutation or closure of income stream due to the account balance being exhausted is needed. A schedule is not required as providers generally do not issue a schedule for a closed product
• If the amount commuted is more than $20,000 ask the customer what has happened to the funds. Ask for any supporting documents needed to update assets purchased
• Go to Step 7

Only proceed with the coding if all the updates needed can be completed.

Only Service Officers with the appropriate training can process these updates at point of contact for all payments.

Is the customer able to provide all the information needed?

• Yes, see Table 2 > Step 1
• No, go to Step 8

Tell the customer:

• All information is needed before any change can be made to ensure they receive correct entitlement
• What information they must provide. This includes what has been done with the commutation funds
• Request all required information. See Requesting information (CLK)

Note: where the customer or partner is unable, or unwilling, to provide information due to Family and Domestic Violence (FDV), escalate to AISR support. AISR support will request the information directly from the provider.

Procedure ends here until documents returned.

Discuss all income and asset updates the customer would like to make during their contact. For example, what has been done with the funds from the commutation, or if there are other income and asset changes.

If there are concerns with the legitimacy of the customer’s information, see Coding income and assets for Centrelink payments and services.

To code a partial commutation, see updating existing deemed (category 9) income stream in Adding or updating an account-based income stream.

Procedure ends here.

• Yes:
• Open the work item via Inbox and select Process
• Go to Step 2
• No:
• Access the customer's record via Customer Summary
• Enter START into the Super Key
• Select Income and Assets Update from Task Selector options
• Select Income Streams (SUPS/SUPI/SUPV) and any additional income and asset types needed
• Select Start
• Go to Step 2

If the commutation is a:

• partial commutation, go to Step 3
• full commutation or product is fully exhausted, go to Step 5

From the Income Streams (SUPS/SUPI/SUPV) screen, expand the appropriate product from Income Streams (SUPS/SUPI/SUPV).

If the customer has made multiple commutations:

• check if all (if any) of the commutation(s) listed on the schedule have been previously provided and recorded. The Commutation Date field may help
• only record new commutations
• if there is more than one new commutation the total of all the amounts is recorded

On the Income Stream Details line, add a new entry and update:

Event Date: field

• The date of the account balance on the schedule
• For example:
• Date on the schedule is 04/09/2019
• Current account balance provided is for this date
• The schedule shows a partial commutation (less than $20,000) on 06/05/2019
• Code the event date as 04/09/2019
• Code the commutation as part of this update with the commutation date as 06/05/2019

Note: for commutations greater than $20,000, the date of the account balance should be as at the date of the commutation. See Table 1 > Step 5

Gross Income Amount: field

• The new gross income amount if changed. Code as stated on the schedule (including cents, if stated)
• Note: if the product is an account-based income stream:
• A minimum gross annual income amount will apply
• The system will not allow an amount less than the minimum to be recorded
• The minimum amount is based on the 1 July account balance
• It is calculated at the start of the financial year or at the start of the income stream
• If a customer specifies an annual income amount for the current financial year that is below the minimum limit, record the minimum amount

For more information, see section 1099DAA of the Social Security Act 1991

Current Account Balance: field

This field is only used for account-based products. It is the new current account balance following a partial commutation.

• If the funds have been transferred to a new income stream, code the new asset-tested income stream using the information from the income stream schedule. For adding the new income stream, see Income streams
• Update any other changes to the customer's income and assets, see Coding income and assets for Centrelink payments and services
• Ensure consistent Date of Events (DOV) are used so that there is no gap in entitlement

Commutation Date: field

• The date of the commutation
• If there were multiple commutations with different dates, use the latest date
• This date relates to the amount coded in the Latest Commutation: field and is for information only. It is not the date of effect

Latest Commutation: field

• Check if all (if any) of the commutation(s) listed on the schedule have been previously provided and recorded. The Commutation Date field may help
• Only record new commutations
• If there is more than one new commutation the total of all the amounts is recorded
• If a commutation has previously been coded incorrectly, make note of the previously coded data. Delete the corresponding entry and recode the correct details
• Commutation/s greater than the purchase price: It is possible for the partial commutation amount to be more than the original purchase price due to underlying investment performance. The system will not allow the sum of the Previous Commutations and Latest Commutation to exceed the purchase price. In such a case, code the Latest Commutation with the amount for the sum of the commutations to equal the original purchase price

Select Save.

Update Receipt Date, Channel and Service Reason (if required), Save.

Check the Income Streams (SUPS/SUPI/SUPV) displays the updated income stream details.

Note: if the product is a market-linked (MLI) income stream in its final year with a payment factor of 1 and displays the error “E022SN - The Gross Annual Income Amount must be between minimum ####.## and maximum ####.##”, see Table 4 > Step 8 on the Process Direct tab in Adding or updating a market-linked income stream.

Go to Step 7

If income stream is fully commuted, cancel the income stream. Do not delete the income stream.

• From the Pension/Annuities Summary (SUPS) screen, select Edit against the appropriate product to access the Change Income Streams (SUPS/SUPI/SUPV) options

Update the Product Cancellation Reason: field with the appropriate option:

• EXP – Term expired:
• Only used for fixed term income streams, life expectancy income streams and market-linked income streams. These will expire at the end of their term and cease payment
• Account-based income streams are not payable for a fixed term
• When the balance is not sufficient to pay the minimum income amount for the financial year, the provider will generally tell the customer to fully commute the income stream and any remaining funds are paid to the customer
• COM – Funds commuted:
• Income stream is closed and funds fully commuted to lump sum cash or due to account balance exhausted for account-based products
• This cancellation reason is used where there is a gap between the date the previous fund was fully commuted and the date the new income stream commences, even if the funds were only deposited into a bank account or held by the Income Stream provider for a few days
• TRN – Funds transferred to another product:
• Income stream is fully commuted (closed) and the funds transferred to another income stream product on the same day
• OTH – Other:
• Must only be used when the income stream has been recorded incorrectly and needs correcting.

Select Save.

Update Receipt Date, Channel and Service Reason (if required), Save.

Expand the product details and check the cancellation date of event (DOV). If needed, edit the auto generated DOV to the correct cancellation date.

The system will automatically set the relevant fields on the Income Stream Details line to zero. Check the Event Date and edit, if required, depending on the Product Cancellation Reason:

• Event Date:
• For TRN code the purchase date of the new income stream to make sure of continuity in the assessment of the asset value
• For COM where the funds were transferred to a bank account use the date the funds were received into the account as the end date of the income stream to avoid duplication or gaps of any income/asset values
• For COM where all the funds were transferred to a new income stream and a gap exists, use the purchase date of the new income stream instead of the actual date the initial income stream was commuted. This will avoid gaps of any income/asset values
• For EXP use the anniversary date, 30 June or other date as indicated in response to the expiry review.

If Event date was changed, Select Save.

Go to Step 7

• If the funds have been transferred to a new income stream, code the new asset-tested income stream using the information from the income stream schedule. For adding the new income stream, see Income streams
• Update any other changes to the customer's income and assets, see Coding income and assets
• Check the Future Activity List (FAL) screen for any review for the return of the documents completed. If there is a review on FAL, complete the review
• Select Assess
• Check the payment outcome on Entitlements (ELD)
• Select Finish:
• If using the Process Direct Income and Assets workflow, NOTES will be pre-populated and display for review
• Add any additional information needed, as per Online Document Recording (ODR)
• Select Finalise. The transaction will complete, and NOTES will replicate to the Document List (DL)

A commutation is:

• a lump sum withdrawal in cash from an income stream, or
• directly rolled over (transferred) to another income stream

A commutation can be a:

• full commutation. All funds have been taken out of the income stream and it has been closed
• partial commutation. Some of the funds have been taken out of the income stream but it still has a balance and remains open

Is the customer advising about a partial commutation as part of their August review for income streams from a Self-Managed Super Fund (SMSF)?

• Yes, see August income stream reviews
• No
• Go to the Pensions and Annuities Summary (SUPS) screen
• Check the Tpe (Product type), Assbl Asset (Assessable Asset amount) and the Prd Cat field (Product category) fields
• Go to Step 2

If the income stream is:

• Account based, Product Category 9 (deemed). All category 9 income streams are asset tested. Partial commutations are not recorded. The current account balance is updated after a commutation. If the update is a:
• partial commutation, go to Step 9
• full commutation, go to Step 6
• Market linked (MLI), Product Category 7 only
• A commutation can only be made in very limited circumstances
• Determine whether the commutation is allowable or not
• See Commutation of asset-test exempt (ATE) income streams
• See Resources page for a link to the Online Query Form. Procedure ends here
• Another income stream, including MLI Product Category 8:
• Check if it is asset tested, go to Step 3

An income stream is asset tested if it does not comply with Sections 9A, 9B,9BA or 9BB of the Social Security Act.

To check:

• From the SUPS screen, select the income stream and 'Continue'
• The Pensions and Annuities Identification (SUPI) screen will display
• Check the Section 9A/B/BA field. If the field has:
• 'N', the product is asset tested
• 'Y', the product is fully or partially asset-test exempt

Is the income stream asset tested, (the indicator is N)?

• Yes, go to Step 4
• No:
• See Commutation of asset-test exempt (ATE) income streams
• Procedure ends here

Discuss all income and asset updates the customer would like to make during their contact. For example, what has been done with the funds from the commutation, or if there are other income and asset changes.

If there are concerns with the legitimacy of the customer’s information, see Coding income and assets for Centrelink payments and services.

If the customer is advising about a:

• partial commutation, go to Step 5
• full commutation, go to Step 6

If the amount commuted is more than $20,000, ask the customer what has happened to the funds. Ask for any supporting documents needed to code new assets purchased.

Documents needed for a partial commutation

• A Details of income stream product form (SA330) or
• similar schedule, completed by the provider, including the:
• details of the commutation, and
• account balance as at the date of the commutation

The Resources page contains a link to the SA330 form.

Can the customer provide the information needed?

• Yes, go to Step 7
• No:
• more information or documents will be needed
• go to Step 8

A change to the Provider Name and/or ABN may indicate a transfer of the product between providers, known as a Successor Fund Transfer (SFT) rather than a commutation and rollover. Refer to the FINS Bulletin for a listing of SFT/Intra Funds Transfers (IFTs). If it is an SFT, see Adding or updating an account-based income stream.

If it is not an SFT, is the current account balance as recorded on the customer's record less than $5000?

• Yes:
• Evidence is not needed
• Go to Step 7
• No:
• Evidence of full commutation or closure of income stream due to the account balance being exhausted is needed. A schedule is not required as providers generally do not issue a schedule for a closed product
• If the amount commuted is more than $20,000 ask the customer what has happened to the funds. Ask for any supporting documents needed to update assets purchased
• Go to Step 7

Only proceed with the coding if all the updates needed can be completed.

Only Service Officers with the appropriate training can process these updates at point of contact for all payments.

Is the customer able to provide all the information needed?

• Yes, see Table 2 > Step 1
• No, go to Step 8

Tell the customer:

• All information is needed before any change can be made to ensure they receive correct entitlement
• What information they must provide. This includes what has been done with the commutation funds
• Request all required information. See Requesting information (CLK)

Note: where the customer or partner is unable, or unwilling, to provide information due to Family and Domestic Violence (FDV), escalate to AISR support. AISR support will request the information directly from the provider.

Procedure ends here until documents returned.

Discuss all income and asset updates the customer would like to make during their contact. For example what has been done with the funds from the commutation, or if there are other income and asset changes.

If there are concerns with the legitimacy of the customer’s information, see Coding income and assets for Centrelink payments and services.

To code a partial commutation, see updating existing deemed (category 9) income stream in Adding or updating an account-based income stream.

Procedure ends here.

If the commutation is a:

• partial commutation, go to Step 2
• full commutation or product is fully exhausted, go to Step 4

From the Pension/Annuities Summary (SUPS) screen, select the income stream to be updated.

Select Continue twice to open the Superannuation Details Variable (SUPV) screen. Start the update.

If the customer has made multiple commutations:

• check if all (if any) of the commutation(s) listed on the schedule have been previously provided and recorded. You may need to check DOVs earlier than the most recent update to see details of commutations that have been previously recorded. The Commutation Date field may help
• only record new commutations
• if there is more than one new commutation the total of all the amounts is recorded

Event Date: field

• The date of the account balance on the schedule
• For example:
• Date on the schedule is 04/09/2019
• Current account balance provided is for this date
• The schedule shows a partial commutation (less than $20,000) on 06/05/2019
• Code the event date as 04/09/2019
• Code the commutation as part of this update with the commutation date as 06/05/2019
  Note: for commutations greater than $20,000, the date of the account balance should be as at the date of the commutation. See Table 1> Step 5

Gross Income Amount: field

• The new gross income amount if changed. Code as stated on the schedule (including cents, if stated)

Account based income stream products:

• A minimum gross annual income amount will apply
• The system will not allow an amount less than the minimum to be recorded
• The minimum amount is based on the 1 July account balance
• It is calculated at the start of the financial year or at the start of the income stream
• If a customer specifies an annual income amount for the current financial year that is below the minimum limit, record the minimum amount

For more information, see section 1099DAA of the Social Security Act 1991

Market-linked (MLI) income stream products:

• In their final year with a payment factor of 1 will display the error “E022SN - The Gross Annual Income Amount must be between minimum ####.## and maximum ####.##”, see Table 4 > Step 8 on the Customer First tab in Adding or updating a market-linked income stream.

Commutation Date: field

• The date of the commutation
• If there were multiple commutations with different dates, use the latest date
• This date relates to the amount coded in the Latest Commutation: field and is for information only. It is not the date of effect

Latest Commutation: field

• Check if all (or any) of the commutation(s) listed on the schedule have been previously provided and recorded. The Commutation Date field may help
• Only record new commutations
• If there is more than one new commutation the total of all the amounts is recorded
• If a commutation has previously been coded incorrectly, make note of the previously coded data. Delete the page and recode the correct details
• Commutation/s greater than the purchase price:
  It is possible for the partial commutation amount to be more than the original purchase price due to underlying investment performance
  The system will not allow the sum of the Previous Commutations and Latest Commutation to exceed the purchase price
  In such a case, code the Latest Commutation with the amount for the sum of the commutations to equal the original purchase price

Current Account Balance: field

This field is only used for account-based products. It is the new current account balance following a partial commutation.

• If the funds have been transferred to a new income stream, code the new asset-tested income stream using the information from the income stream schedule. For adding the new income stream, see Income streams
• Update any other changes to the customer's income and assets, see Coding income and assets for Centrelink payments and services
• Ensure consistent Date of Events (DOV) are used so that there is no gap in entitlement
• Record the details of the commutation and any other changes on a DOC

Complete the Source, DOR and Action fields.

Select Continue.

Go to Step 6.

If income stream is fully commuted, cancel the income stream. Do not delete the income stream.

• From the Pension/Annuities Summary (SUPS) screen, select the income stream to be updated
• Select continue to open the Pension/Annuities Identification (SUPI) screen. Start the update.

Product Cancellation Reason: field

Code the correct option. It will be either:

• EXP:
• Only used for fixed term income streams, life expectancy income streams and market-linked income streams. These will expire at the end of their term and cease payment
• Account-based income streams are not payable for a fixed term
• When the balance is not sufficient to pay the minimum income amount for the financial year, the provider will generally tell the customer to fully commute the income stream and any remaining funds are paid to the customer
• COM:
• Income stream is closed and funds fully commuted to lump sum cash or due to account balance exhausted for account-based products
• This cancellation reason is used where there is a gap between the date the previous fund was fully commuted and the date the new income stream commences, even if the funds were only deposited into a bank account or held by the Income Stream provider for a few days
• TRN:
• Income stream is fully commuted (closed) and the funds transferred to another income stream product on the same day

Note: option OTH must only be used when the income stream has been recorded incorrectly and needs correcting.

In the Action: field - code C (system will not accept I). Select Continue to open the Pension/Annuities Details Variable (SUPV) screen.

The system will automatically set the relevant fields on the SUPV screen to zero. Code:

• Event Date:
• For TRN code the purchase date of the new income stream to make sure of continuity in the assessment of the asset value
• For COM where the funds were transferred to a bank account use the date the funds were received into the account as the end date of the income stream to avoid duplication or gaps of any income/asset values
• For COM where all the funds were transferred to a new income stream and a gap exists, use the purchase date of the new income stream instead of the actual date the initial income stream was commuted. This will avoid gaps of any income/asset values
• Complete the Source, DOR and Action fields
• Select Continue
• Go to Step 6

• If the funds have been transferred to a new income stream, code the new asset-tested income stream using the information from the income stream schedule. For adding the new income stream, see Income streams
• Update any other changes to the customer's income and assets, see Coding income and assets
• Record the details of the commutation and any other changes on a DOC
• Check the Future Activity List (FAL) screen for any review for the return of the documents completed. If there is a review on FAL, complete the review