16Guidelines for asset‑test exempt income stream resulting from closure of a self managed superannuation fund

16 Guidelines for asset‑test exempt income stream resulting from closure of a self managed superannuation fund

The Commission may determine that an income stream is an asset‑test exempt income stream for the purposes of the Act if: (a) it would have been covered by section 5JA(1) or 5JB(1) of the Act or those sections, if (i) paragraph 5JA(1)(aa); or (ii) subparagraph 5JB(1)(a)(i); of the Act did not apply; and (b) it is purchased by the primary beneficiary; and (c) it is not sourced from a self managed superannuation fund; and (d) it results from another asset‑test exempt income stream (the original income stream) being commuted as a result of the closure of a self managed superannuation fund because: (i) a member of the fund supporting the original income stream died; or (ii) the administrative responsibilities of the fund supporting the original income stream became too onerous due to the age or incapacity of a trustee; and (e) the original income stream was: (i) covered by section 5JA or 5JB of the Act or would have been covered by those sections if paragraph 5JA(1)(aa) or subparagraph 5JB(1)(a)(i) of the Act did not apply; and (ii) sourced from a self managed superannuation fund; and (f) the original income stream: (i) was covered by the 2005 Principles during the period starting on 20 September 2004 and ending at the end of 19 September 2007; or (ii) was covered by the 2007 Determination during the period starting on 20 September 2007 and ending at the end of 24 November 2011; or (iii) was covered by the 2011 Determination during the period starting on 25 November 2011 and ending at the end of the day immediately prior to the commencement of this Determination; or (iv) is covered by this Determination.

Note: Example

Note: F and W are trustees of their self managed superannuation fund. They both have lifetime asset‑test exempt income streams that were purchased on 1 July 2003 when F was 65 and W was 64. F dies on 26 January 2023. W subsequently decides that she does not have the expertise or inclination to continue as a fund trustee. W commutes her asset‑test exempt income stream and uses the proceeds to purchase from a retail income stream provider, an income stream that meets the provisions of section 5JA of the Act. The new income stream is covered by this Determination and retains the 100% exemption from the assets test under the Act.