5JFinancial assets and income streams definitions

#### 5J Financial assets and income streams definitions (1) In this Act, unless the contrary intention appears: > approved deposit fund has the same meaning as in the Income Tax Assessment Act 1997. > asset‑tested income stream (lifetime) has the meaning given by section 5JE. > asset‑tested income stream (long term) means an income stream that is an asset‑tested income stream (long term) under section 5JD or an income stream that: (a) is not an asset‑test exempt income stream; and (b) has, on its commencement day: (i) a specified term of more than 5 years; or (ii) if the person who has acquired the income stream has a life expectancy of 5 years or less—a specified term equal to or greater than the person’s life expectancy. > Note: Since the income stream must be for a specified term, an asset‑tested income stream (long term) cannot be an asset‑tested income stream (lifetime). > asset‑tested income stream (short term) means an income stream that is an asset‑tested income stream (short term) under section 5JD or an income stream that is none of the following: (a) an asset‑test exempt income stream; (b) an asset‑tested income stream (long term); (c) an asset‑tested income stream (lifetime). > asset‑test exempt income stream has the meanings given by sections 5JA, 5JB, 5JBA and 5JBB. > ATO small superannuation account means an account kept in the name of an individual under the Small Superannuation Accounts Act 1995. > commencement day, in relation to an income stream, means the first day of the period to which the first payment under the income stream relates. > deductible amount, in relation to a defined benefit income stream for a year, means the sum of the amounts that are the tax free components (worked out under Subdivision 307‑C of the Income Tax Assessment Act 1997 or, if applicable, section 307‑125 of the Income Tax (Transitional Provisions) Act 1997) of the payments received from the defined benefit income stream during the year. > defined benefit income stream has the meaning given by subsection (1E). > deprived asset has the meaning given by subsection (2B). > designated NDIS amount means: (a) an NDIS amount that is deposited in an account with a financial institution; and (b) any return on the NDIS amount that a person earns, derives or receives. > family law affected income stream has the meaning given by section 5JC. > financial asset means: (a) a financial investment; or (b) a deprived asset. > Note: For deprived asset see subsection (2B). > financial investment means: (a) available money; or (b) deposit money; or (c) a managed investment; or (d) a listed security; or (e) a loan that has not been repaid in full; or (f) an unlisted public security; or (g) gold, silver or platinum bullion; or (h) an asset‑tested income stream (short term); or (i) an asset‑tested income stream (long term) that is an account‑based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or (j) an asset‑tested income stream (long term) that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the requirements determined in an instrument under subsection (1G); but does not include a designated NDIS amount. > Note: For loan see subsections (2) and (2A). > friendly society means: (a) a body that is a friendly society for the purposes of the Life Insurance Act 1995; or (b) a body that is registered or incorporated as a friendly society under a law of a State or Territory; or (c) a body that is permitted, by a law of a State or Territory, to assume or use the expression friendly society; or (d) a body that, immediately before the date that is the transfer date for the purposes of the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999, was registered or incorporated as a friendly society under a law of a State or Territory; or (e) a body that had, before 13 December 1987, been approved for the purpose of the definition of friendly society in subsection 115(1) of the Social Security Act 1947. > governing rules, in relation to an income stream, means any trust instrument, other document or legislation, or combination of them, governing the establishment and operation of the income stream. > income stream means: (a) an income stream arising under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993; or (b) an income stream arising under a public sector superannuation scheme (within the meaning of that Act); or (c) an income stream arising under a retirement savings account; or (d) an income stream provided as life insurance business by a life company registered under section 21 of the Life Insurance Act 1995; or (f) an income stream designated in writing by the Commission for the purposes of this definition, having regard to the guidelines determined under subsection (1F); or (fa) a family law affected income stream; but does not include any of the following: (g) available money; (h) deposit money; (i) a managed investment; (j) a listed security; (k) a loan that has not been repaid in full; (l) an unlisted public security; (m) gold, silver or platinum bullion; (n) a payment of compensation to a person, or a payment to a person under an insurance scheme, in relation to: (i) the person’s inability to earn, derive or receive income from remunerative work; or (ii) the person’s total and permanent disability or incapacity. > investment: (a) in relation to a superannuation fund or approved deposit fund—has the meaning given by subsection (6); or (b) in relation to an ATO small superannuation account—has the meaning given by subsection (6A). > investor, in relation to an ATO small superannuation account, means the person in whose name the account is kept. > life expectancy has the same meaning as life expectation factor has in section 27H of the Income Tax Assessment Act. > listed security means: (a) a share in a company; or (b) another security; listed on a stock exchange. > loan has a meaning affected by subsections (2) and (2A). > managed investment has the meaning given by subsections (1A), (1B) and (1C). > military invalidity pension income stream has the meaning given by subsection (1EA). > original family law affected income stream has the meaning given by section 5JC. > primary FLA income stream has the meaning given by section 5JC. > public unit trust means a unit trust that: (a) except where paragraph (b) applies—was, in relation to the unit trust’s last year of income, a public unit trust for the purposes of Division 6B of Part III of the Income Tax Assessment Act; or (b) where the first year of income of the unit trust has not yet finished—has, at some time since the trust was established, satisfied at least one of the paragraphs of subsection 102G(1) of the Income Tax Assessment Act. > purchase price, in relation to an income stream, means the sum of the payments made to purchase the income stream (including amounts paid by way of employer and employee contributions) less any commuted amounts. > relevant number, in relation to an income stream, means: (a) if the income stream is payable for a fixed number of years—that number; or (b) if the income stream is payable during the lifetime of a person and no longer—the number of years of the person’s life expectancy; or (c) if the income stream: (i) is jointly owned by a person and his or her partner and is payable for the lifetime of the person or the partner; or (ii) is payable during the lifetime of a person and then for the lifetime of a reversionary beneficiary; the number of years in the longer of the relevant life expectancies; or (d) in any other case—the number that the Commission considers appropriate having regard to the number of years in the total period during which the income stream will be, or may reasonably be expected to be, payable. > residual capital value, in relation to an income stream, means the capital amount payable on the termination of the income stream. > Note: An account‑based income stream does not have a residual capital value (see subsection (9) of this section). > retirement savings account has the meaning that it has in the Retirement Savings Accounts Act 1997. > return: (a) in relation to an ATO small superannuation account—means so much of the balance of the account as is attributable to interest; or (b) in relation to any other investment (including an investment in the nature of superannuation)—means any increase, whether of a capital or income nature and whether or not distributed, in the value or amount of the investment. > secondary FLA income stream has the meaning given by section 5JC. > superannuation benefit, in relation to a person, means: (a) a benefit arising directly or indirectly from amounts contributed (whether by the person or by any other person) to a superannuation fund in respect of the person; or (b) a payment under Part 7 of the Small Superannuation Accounts Act 1995, where the payment is in respect of an ATO small superannuation account kept in the name of the person. > superannuation contributions surcharge has the meaning that it has in the Superannuation Contributions Tax (Assessment and Collection) Act 1997. > superannuation fund means: (a) a fund that is or has been a complying superannuation fund within the meaning of section 45 of the Superannuation Industry (Supervision) Act 1993 in relation to any tax year; or (b) an Australian superannuation fund (within the meaning of the Income Tax Assessment Act 1997) that is not a complying superannuation fund mentioned in paragraph (a) in relation to any tax year; or (c) a scheme for the payment of benefits upon retirement or death that is constituted by or under a law of the Commonwealth or of a State or Territory; or (d) an RSA within the meaning of the Retirement Savings Accounts Act 1997; or (e) any of the following funds (unless the fund is a foreign superannuation fund): (i) a fund to which paragraph 23(jaa), or section 23FC, 121CC or 121DAB, of the Income Tax Assessment Act 1936 (as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1989) has applied in relation to any tax year; (ii) a fund to which paragraph 23(ja), or section 23F or 23FB, of the Income Tax Assessment Act 1936 (as in force at any time before the commencement of paragraph (a) of the definition of superannuation fund in former subsection 27A(1) of the Income Tax Assessment Act 1936) has applied in relation to the tax year that started on 1 July 1985 or an earlier tax year; (iii) a fund to which section 79 of the Income Tax Assessment Act 1936 (as in force at any time before 25 June 1984) has applied in relation to the tax year that started on 1 July 1983 or an earlier tax year. > Note: For foreign superannuation fund see subsection 5L(1). > unlisted public security means: (a) a share in a public company; or (b) another security; that is not listed on a stock exchange. (1A) Subject to subsections (1B) and (1C), an investment is a managed investment for the purposes of this Act if: (a) the money or property invested is paid by the investor directly or indirectly to a body corporate or into a trust fund; and (b) the assets that represent the money or property invested (the invested assets) are not held in the names of investors; and (c) the investor does not have effective control over the management of the invested assets; and (d) the investor has a legally enforceable right to share in any distribution of income or profits derived from the invested assets. (1B) Without limiting the generality of subsection (1A) but subject to subsection (1C), the following are managed investments for the purposes of this Act: (a) an investment in a public unit trust; (b) an investment in an insurance bond; (c) an investment with a friendly society; (d) an investment in a superannuation fund; (e) an investment in an approved deposit fund; (g) an investment in an ATO small superannuation account; (h) an asset‑tested income stream (lifetime) that does not arise under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993. > Note 1: For paragraph (d), see paragraph (1C)(a) for superannuation investments held before pension age is reached. > Note 2: For paragraph (e), see paragraph (1C)(b) for investments in approved deposit funds held before pension age is reached. > Note 4: For paragraph (g), see paragraph (1C)(ca) for investments in ATO small superannuation accounts held before pension age is reached. > Note 5: For paragraph (h), see paragraph (1C)(j) for a person’s asset‑tested income stream (lifetime) that does not arise under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993 if the person’s assessment day (within the meaning of section 52BAB) for the income stream has occurred. (1C) The following are not managed investments for the purposes of this Act: (a) an investment in a superannuation fund if the investor has not yet turned pension age; (b) an investment in an approved deposit fund if the investor has not yet turned pension age; (ca) an investment in an ATO small superannuation account if the investor has not yet turned pension age; (d) deposit money; (e) a loan; (f) an asset‑test exempt income stream; (g) an asset‑tested income stream (long term); (h) an asset‑tested income stream (short term); (i) a person’s asset‑tested income stream (lifetime) that arises under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993; (j) a person’s asset‑tested income stream (lifetime) that does not arise under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993 if the person’s assessment day (within the meaning of section 52BAB) for the income stream has occurred. > Note 1: For pension age see subsection (1D) and sections 5QA and 5QB. > Note 2: For deposit money see subsection 5H(1). > Note 3: For provisions relating to when a loan is taken to be made see subsection (2). (1D) For the purposes of the application of subsection (1C) in relation to income support supplement, the references in paragraphs (1C)(a), (b) and (c) to pension age are taken to be references to the qualifying age. > Note: For qualifying age see section 5Q. (1E) An income stream is a defined benefit income stream if: (a) under the Superannuation Industry (Supervision) Regulations 1994, the income stream is taken to be a pension for the purposes of the Superannuation Industry (Supervision) Act 1993; and (b) except in the case of an income stream arising under a superannuation fund established before 20 September 1998—the income stream is provided under rules that meet the standards of subregulation 1.06(2) of the Superannuation Industry (Supervision) Regulations 1994; and (ba) in the case of an income stream arising under a superannuation fund established before 20 September 1998—the income stream is provided under rules that meet the standards determined, by legislative instrument, by the Minister; and (c) in any case—the income stream is attributable to a defined benefit interest within the meaning of the Superannuation Industry (Supervision) Regulations 1994 (for this purpose, disregard subparagraph 1.03AA(1)(b)(ii) of those regulations). (1EA) An income stream is a military invalidity pension income stream if: (a) the income stream is: (i) invalidity pay within the meaning of the Defence Force Retirement and Death Benefits Act 1973; or (ii) an invalidity pension under the superannuation scheme established under the Military Superannuation and Benefits Act 1991; or (iii) an income stream provided under a superannuation scheme and that is covered by an instrument under subsection (1FA); and (b) the income stream is not a defined benefit income stream. (1F) The Commission may determine, by legislative instrument, guidelines to be complied with when designating an income stream for the purposes of the definition of income stream in subsection (1). (1FA) For the purposes of subparagraph (1EA)(a)(iii), the Commission may, by legislative instrument, do any one or more of the following: (a) specify an income stream; (b) describe an income stream; (c) determine requirements relating to an income stream; regardless of whether the income stream relates to military service or invalidity. (1FB) Without limiting subsection 33(3A) of the Acts Interpretation Act 1901, an instrument under subsection (1FA) may make different provision in relation to: (a) different kinds of income streams; and (b) different kinds of circumstances. > Note: For specification by class, see subsection 13(3) of the Legislation Act 2003. (1G) The Minister may, by legislative instrument, determine requirements for the purposes of paragraph (j) of the definition of financial investment in subsection (1). (2) The following rules apply for the purposes of this Act: (a) the acquisition by a person of debentures, bonds or other securities is treated as the making of a loan by the person; (b) a person is not treated as having made a loan merely because: (i) the person has an account with a financial institution; or (ii) the person has paid an entry contribution. > Note: For entry contribution see section 52M. (2A) Subsection (2) does not limit the meaning of the word loan in this Act. (2B) For the purposes of this Act, an asset is a deprived asset if: (a) a person has disposed of the asset; and (b) the value of the asset is included in the value of the person’s assets by Subdivision BA or BB of Division 11 of Part IIIB. > Note: For circumstances in which a person is taken to dispose of assets see section 52E. (2C) To avoid doubt, none of the following is a financial investment for the purposes of this Act: (a) an accommodation bond; (b) an accommodation bond balance; (c) a refundable deposit; (d) a refundable deposit balance. > Note: These expressions are defined in section 5L. (6) For the purposes of this Act, a person has an investment in a superannuation fund or approved deposit fund if the person has benefits in the fund (whether the benefits are attributable to amounts paid by the person or someone else). (6A) For the purposes of this Act: (a) a person has an investment in an ATO small superannuation account if: (i) the account is kept in the name of the person; and (ii) the balance of the account exceeds nil; and (b) the amount or value of that investment equals the balance of the account. (9) To avoid doubt, for the purposes of this Act, an account‑based income stream does not have a residual capital value.