(g) the amount paid as the purchase price is wholly converted into annuity income.
(7) A contract for the provision of a benefit (in this subregulation called the annuity) that:
(a) does not meet the standards of subregulation (2); and
(b) provides for payments whose size in a year is fixed, allowing for variation only as specified in the contract; and
(c) provides for additional payments (in this subregulation called bonus payments);
(d) the commencement day of which is on or after 1 July 1994;
meets the standards of this subregulation if it at least ensures that:
(e) in respect of the fixed‑size payments—the standards in subregulation (6) are met; and
(f) the fixed‑size payments amount to at least 50% of:
(i) if the provider provides annuities of the kind specified in subregulation (6)—the amount that would be payable if the annuity were wholly of that kind; or
(ii) if the provider does not provide annuities of the kind specified in subregulation (6)—the fixed‑size payments are at least equal in amount to 50% of the interest payable on Commonwealth bonds that have the same value as the purchase price of the annuity and that most closely correspond in term to the term of the annuity; and
(g) the amounts of the bonus payments (if any) are reasonably proportional to the investment income from which the payments purport to be derived; and
(h) the amount of a bonus payment (if any) is notified in writing by the provider each year and is paid to the beneficiary in the year next following (except when deferral of the payment would not result, in any future year, in the rate of increase in size of the total payments for the year exceeding the average rate of increase of the CPI in the preceding 3 years).
(8) A contract for the provision of a benefit (in this subregulation called the annuity):
(a) that does not meet all the standards in any other provision of this regulation; and
(b) under which the commencement day is on or after 22 December 1992; and
(c) that provides for:
(i) payments whose size in a year is fixed, allowing for variation only as specified in the contract; and
(ii) additional payments whose size is not fixed, derived from the application of part of the purchase price to investments by allocation of the annuity provider;
meets the standards of this subregulation if it at least ensures that:
(d) in respect of fixed‑size payments—if the commencement day is on or after 1 July 1994, the standards in subregulation (6) are met; and
(e) in respect of payments whose size is not fixed—the standards in subregulation (4) are met.
Note: 22 December 1992 was the date of Royal Assent to the Taxation Laws Amendment (Superannuation) Act 1992.
(9) A contract for the provision of a benefit (in this subregulation called the annuity) meets the standards of this subregulation if the contract ensures that:
(a) for an annuity that has a commencement day before 20 September 2004:
(i) if the life expectancy of the primary beneficiary on the commencement day is less than 15 years—the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary’s life expectancy on the commencement day, rounded up, at the primary beneficiary’s option, to the next whole number if the primary beneficiary’s life expectancy does not consist of a whole number of years; or
(ii) if the life expectancy of the primary beneficiary on the commencement day is 15 years or more—the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period that is not less than 15 years but not more than the primary beneficiary’s life expectancy on the commencement day, rounded up, at the primary beneficiary’s option, to the next whole number if the primary beneficiary’s life expectancy does not consist of a whole number of years; and
(b) for an annuity that has a commencement day on or after 20 September 2004:
(i) the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary’s life expectancy on the commencement day, rounded up to the next whole number if the primary beneficiary’s life expectancy does not consist of a whole number of years; or
(ii) the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary’s life expectancy mentioned in subparagraph (i) calculated, at the option of the primary beneficiary, as if the primary beneficiary were up to 5 years younger on the commencement day; or
(iia) if the annuity has a commencement day on or after 1 January 2006—the annuity is paid at least annually to the primary beneficiary or reversionary beneficiary throughout a period that is not less than the period available under subparagraph 1.05(9)(b)(i), and not more than the greater of the following periods:
(A) the maximum period available under subparagraph 1.05(9)(b)(ii);
(B) the period of years equal to the number that is the difference between the age attained by the primary beneficiary at his or her most recent birthday before the commencement day, and 100; or
(iii) if:
(A) the annuity is an annuity that reverts to a surviving spouse on the death of the primary beneficiary; and
(B) the life expectancy of the primary beneficiary’s spouse is greater than the life expectancy of the primary beneficiary; and
(C) the primary beneficiary has not chosen to make an arrangement mentioned in subparagraph (i), (ii) or (iia) for the annuity;
the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to:
(D) the life expectancy of the spouse on the commencement day; or
(E) the life expectancy of the spouse calculated, at the option of the primary beneficiary, as if the spouse were up to 5 years younger on the commencement day; or
(F) if the annuity has a commencement day on or after 1 January 2006—a period that is not less than the period available under sub‑subparagraph 1.05(9)(b)(iii)(D), and not more than the greater of the following periods:
(I) the maximum period available under sub‑subparagraph 1.05(9)(b)(iii)(E);
(II) the period of years equal to the number that is the difference between the age attained by the spouse at his or her most recent birthday before the commencement day, and 100;
at the option of the primary beneficiary, and rounded up to the next whole number if the life expectancy of the spouse, or the period, does not consist of a whole number of years; and
(c) the total amount of the payment, or payments, to be made in the first year after the commencement day (not taking commuted amounts into account) is fixed and that payment, or the first of those payments, relates to the period commencing on the day the benefit was purchased; and
(d) the total amount of the payments to be made in a year other than the first year after the commencement day (not taking commuted amounts into account) does not fall below the total amount of the payments made in the immediately preceding year (the previous total), and does not exceed the previous total:
(i) if CPIc is less than or equal to 4%—by more than 5% of the previous total; or
(ii) if CPIc is more than 4%—by more than CPIc + 1%;
where:
CPIc is the change (if any), expressed as a percentage, determined by comparing the quarterly CPI first published by the Australian Statistician for the second‑last quarter before the day on which the first of those payments is to be made and the quarterly CPI first published by the Australian Statistician for the same quarter in the immediately preceding year;
and
(e) the total amount of the payments to be made in a year in accordance with paragraph (c) or (d) may be varied only:
(i) to allow commutation to pay a superannuation contributions surcharge; or
(ii) to allow an amount to be paid under a payment split and reasonable fees to be charged in respect of the payment split; or
(iii) to allow commutation in order to comply with section 136‑80 in Schedule 1 to the Taxation Administration Act 1953; and
(f) the amount paid as the purchase price is wholly converted into annuity income; and
(g) the annuity does not have a residual capital value; and
(h) the annuity cannot be commuted except in any of the following circumstances:
(i) the annuity is not funded from the commutation of:
(A) an annuity that meets the standards of this subregulation or subregulation (2), (3) or (10); or
(B) a pension that meets the standards of subregulation 1.06(2), (3), (7) or (8); or
(C) a pension that meets the standards of subregulation 1.07(3A) of the RSA Regulations;
and the commutation is made within 6 months after the commencement day of the annuity;
(ii) subject to subparagraph (iv), by payment, on the death of the primary beneficiary, to the benefit of a reversionary beneficiary or, if there is no reversionary beneficiary, to the estate of the primary beneficiary;
(iii) subject to subparagraph (iv), by payment, on the death of a reversionary beneficiary, to the benefit of another reversionary beneficiary or, if there is no other reversionary beneficiary, to the estate of the reversionary beneficiary;
(iv) for subparagraphs (ii) and (iii), if the primary beneficiary has opted, under subparagraph (b)(iii), for a period worked out in relation to the life expectancy or age of the primary beneficiary’s spouse—the annuity cannot be commuted until the death of both the primary beneficiary and the spouse;
(v) the superannuation lump sum resulting from the commutation is transferred directly to the purchase of another benefit that is:
(A) an annuity provided under a contract that meets the standards of subregulation (2), (3) or (10) or this subregulation; or
(B) a pension that is provided under rules that meet the standards of subregulation 1.06(2), (3), (7) or (8); or
(C) a pension that is provided under terms and conditions that meet the standards of subregulation 1.07(3A) of the RSA Regulations;
(via) subregulation 1.05AA(1) applies to the commutation;
(vi) to pay a superannuation contributions surcharge;
(vii) to give effect to an entitlement of a non‑member spouse under a payment split;
(viii) for the purpose of paying an amount under Division 131 or 135 in Schedule 1 to the Taxation Administration Act 1953, or section 292‑80C of the Income Tax (Transitional Provisions) Act 1997, to give effect to a release authority in respect of the primary beneficiary;
(ix) the annuity was commenced in contravention of Part 6 and the commutation would result in an obligation to pay an amount to the Commissioner of Taxation under subsection 20F(1) of the Superannuation (Unclaimed Money and Lost Members) Act 1999;
(x) in order to comply with section 136‑80 in Schedule 1 to the Taxation Administration Act 1953; and
(i) if the annuity reverts, it does not have a reversionary component greater than 100% of the benefit that was payable before the reversion; and
(j) if the annuity is commuted, the commuted amount cannot exceed the benefit that was payable immediately before the commutation; and
(k) the annuity cannot be transferred to a person except:
(i) on the death of the primary beneficiary, to a reversionary beneficiary or, if there is no reversionary beneficiary, to the estate of the primary beneficiary; or
(ii) on the death of a reversionary beneficiary, to another reversionary beneficiary or, if there is no other reversionary beneficiary, to the estate of the reversionary beneficiary; and
(l) the capital value of the annuity, and the income from it, cannot be used as security for a borrowing.
(10) A contract for the provision of a benefit (market linked annuity) meets the standards of this subregulation if the contract ensures that:
(a) the market linked annuity:
(i) is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary’s life expectancy on the commencement day of the annuity, rounded up to the next whole number if the primary beneficiary’s life expectancy does not consist of a whole number of years; or
(ii) is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary’s life expectancy mentioned in subparagraph (i) calculated, at the option of the primary beneficiary, as if the primary beneficiary were up to 5 years younger on the commencement day; or
(iia) if the annuity has a commencement day on or after 1 January 2006—the annuity is paid at least annually to the primary beneficiary or reversionary beneficiary throughout a period that is not less than the period available under subparagraph 1.05(10)(a)(i), and not more than the greater of the following periods:
(A) the maximum period available under subparagraph 1.05(10)(a)(ii);
(B) the period of years equal to the number that is the difference between the age attained by the primary beneficiary at his or her most recent birthday before the commencement day, and 100; or
(iii) if:
(A) the annuity is an annuity that reverts to a surviving spouse on the death of the primary beneficiary; and
(B) the life expectancy of the primary beneficiary’s spouse is greater than the life expectancy of the primary beneficiary; and
(C) the primary beneficiary has not chosen to make an arrangement mentioned in subparagraph (i), (ii) or (iia) for the annuity;
the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to:
(D) the life expectancy of the spouse on the commencement day; or
(E) the life expectancy of the spouse calculated, at the option of the primary beneficiary, as if the spouse were up to 5 years younger on the commencement day; or
(F) if the annuity has a commencement day on or after 1 January 2006—a period that is not less than the period available under sub‑subparagraph 1.05(10)(a)(iii)(D), and not more than the greater of the following periods:
(A) the maximum period available under sub‑subparagraph 1.05(10)(a)(iii)(E);
(B) the period of years equal to the number that is the difference between the age attained by the spouse at his or her most recent birthday before the commencement day, and 100;
at the option of the primary beneficiary, and rounded up to the next whole number if the life expectancy of the spouse, or the period, does not consist of a whole number of years; and
(b) the total amount of the payments to be made in a year (excluding payments by way of commutation but including payments made under a payment split) is determined in accordance with Schedule 6; and
(c) the market linked annuity does not have a residual capital value; and
(d) the market linked annuity cannot be commuted except in any of the following circumstances:
(i) the annuity is not funded from the commutation of:
(A) another annuity that is provided under a contract that meets the standards of subregulation (2), (3) or (9) or this subregulation; or
(B) a pension that is provided under rules that meet the standards of subregulation 1.06(2), (3), (7) or (8); or
(C) a pension that is provided under terms and conditions that meet the standards of subregulation 1.07(3A) of the RSA Regulations;
and the commutation is made within 6 months after the commencement day of the annuity;
(ii) subject to subparagraph (iii), on the death of the primary beneficiary or reversionary beneficiary, by payment of:
(A) a lump sum or a new annuity to one or more dependants of either the primary beneficiary or reversionary beneficiary; or
(B) a lump sum to the legal personal representative of either the primary beneficiary or reversionary beneficiary; or
(C) if, after making reasonable enquiries, the provider of the annuity is unable to find a person mentioned in sub‑subparagraph (A) or (B)—a lump sum to another individual;
(iii) for subparagraph (ii), if the primary beneficiary has opted, under subparagraph (a)(iii), for a period worked out in relation to the life expectancy or age of the primary beneficiary’s spouse—the market linked annuity cannot be commuted until the death of both the primary beneficiary and the spouse;
(iv) the superannuation lump sum resulting from the commutation is transferred directly to the purchase of another benefit that is:
(A) an annuity provided under a contract that meets the standards of subregulation 1.05(2), (3) or (9) or this subregulation; or
(B) a pension that is provided under rules that meet the standards of subregulation 1.06(2), (3), (7) or (8); or
(C) a pension that is provided under terms and conditions that meet the standards of subregulation 1.07(3A) of the RSA Regulations;
(iva) subregulation 1.05AA(1) applies to the commutation;
(v) to pay a superannuation contributions surcharge;
(vi) to give effect to an entitlement of a non‑member spouse under a payment split;
(vii) for the purpose of paying an amount under Division 131 or 135 in Schedule 1 to the Taxation Administration Act 1953, or section 292‑80C of the Income Tax (Transitional Provisions) Act 1997, to give effect to a release authority in respect of the primary beneficiary;
(viii) the annuity was commenced in contravention of Part 6 and the commutation would result in an obligation to pay an amount to the Commissioner of Taxation under subsection 20F(1) of the Superannuation (Unclaimed Money and Lost Members) Act 1999;
(ix) in order to comply with section 136‑80 in Schedule 1 to the Taxation Administration Act 1953; and
(e) if the market linked annuity reverts, it does not have a reversionary component greater than 100% of the account balance immediately before the reversion; and
(f) if the market linked annuity is commuted, the commutation amount cannot exceed the account balance immediately before the commutation; and