20Partially asset‑test exempt income stream resulting from original partially asset‑test exempt income stream purchased on or after 20 September 2004 but before 20 September 2007

20 Partially asset‑test exempt income stream resulting from original partially asset‑test exempt income stream purchased on or after 20 September 2004 but before 20 September 2007

(1) These Principles cover an income stream if: (a) the income stream (the present income stream) is purchased by the primary beneficiary on or after 20 September 2007 from the commutation of a partially asset‑test exempt income stream (the original income stream); and (b) the original income stream was purchased on or after 20 September 2004 and before 20 September 2007; and (c) the original income stream is a kind of income stream in relation to which one of the following subsections applies. (2) This subsection applies to an original income stream if: (a) it was purchased by the primary beneficiary for the benefit of the primary beneficiary and a reversionary beneficiary; and (b) payments made under the income stream are calculated on the basis of the life expectancy of the reversionary beneficiary; and (c) the reversionary beneficiary predeceases the primary beneficiary. (3) This subsection applies to an original income stream if: (a) it is not an income stream to which section 22 or 23 of these Principles applies; and (b) it is purchased by the primary beneficiary for the benefit of the primary beneficiary and a reversionary beneficiary who, at the time of the purchase, are members of a couple together; and (c) the primary beneficiary and reversionary beneficiary are no longer members of a couple together.

Note: Example

Note: On 1 March 2005, J purchased an income stream (the original income stream) covered by subsection 9A(1) of the Act for the benefit of J, the primary beneficiary, and H, the reversionary beneficiary. The income stream has a 50% exemption from the social security assets test. At the time of the purchase, J and H were members of a couple together. On 1 December 2008, J and H ceased to be members of a couple together. On 15 December 2008, J commutes the original income stream and purchases another income stream (the new income stream) covered by section 9A) of the Act. The new income stream is covered by these Principles and retains the 50% exemption from the social security assets test.

(4) This subsection applies to an original income stream if: (a) it is a defined benefit pension covered by subsection 9A(1) or 9B(1A) of the Act that is provided by a regulated superannuation fund; and (b) it is an income stream in relation to which the Secretary is not satisfied as required by paragraph 9A(1)(b) or 9B(1A)(b) of the Act, as applicable.

Note: Example

Note: On 1 March 2005, P purchased an income stream (the original income stream) that is a defined benefit pension covered by section 9A of the Act that is provided by a regulated superannuation fund. Paragraph 9A(1)(b) of the Act applies to the original income stream. The income stream has a 50% exemption from the social security assets test. On 1 September 2022, the Secretary of the Department of Social Services is not satisfied that the requirements of paragraph 9A(1)(b) of the Act are met in relation to the original income stream. On 15 September 2022, P commutes the original income stream to purchase another income stream (the new income stream) that is covered by section 9A of the Act. The new income stream is covered by these Principles and retains the 50% exemption from the social security assets test.

Note Paragraphs 9A(1)(b) and 9B(1A)(b) of the Act require the Secretary to be satisfied, in relation to an income stream, that there is in force a current actuarial certificate stating that in the actuary’s opinion there is a high probability that the provider of the income stream will be able to pay the income stream as required under the income stream’s contract or governing rules.

(5) This subsection applies to an original income stream if: (a) the income stream is an immediate annuity under a statutory fund established by a life company, or under a benefit fund; and (b) the income stream: (i) is an income stream to which paragraph 9A(1)(b) or 9B(1A)(b) of the Act applies or would have applied if paragraph 9A(1)(aa) or subparagraph 9B(1)(a)(i) of the Act did not apply, and in relation to which the Secretary is not satisfied as required by that paragraph; or (ii) fails to satisfy relevant standards published by the Australian Prudential Regulation Authority about minimum surrender values and paid up values.

Note Paragraphs 9A(1)(b) and 9B(1A)(b) of the Act require the Secretary to be satisfied, in relation to an income stream, that there is in force a current actuarial certificate stating that in the actuary’s opinion there is a high probability that the provider of the income stream will be able to pay the income stream as required under the income stream’s contract or governing rules.