6Determination of extent and purchase amount

6 Determination of extent and purchase amount

(1) This section is made for the purposes of the following provisions of the Act:
(a) subsection 5JE(2);
(b) paragraph 52BAA(4)(b);
(c) paragraph 52BAB(13)(b).
(2) If, under section 5 of this instrument, an income stream is determined to be a kind of income stream for the purposes of paragraph 5JE(2)(b) of the Act:
(a) the lifetime component of the income stream is an asset‑tested income stream (lifetime); and
(b) the purchase amount for the lifetime component is:
(i) if the lifetime component is financed, wholly or partly, by fees or charges—the amount of any such fees or charges paid by the individual; and
(ii) if the lifetime component is financed, wholly or partly, by a specified fund or investment option into which the individual was required (directly or indirectly) to pay an amount or amounts in order to obtain the payments made by the lifetime component—the amount worked out in accordance with subsection (3) or (4).
(3) For the purposes of paragraph 52BAA(4)(b) of the Act, the amount is the sum of each compounded amount in relation to amounts paid by the individual into the specified fund or investment option. For this purpose, a compounded amount is worked out by applying the formula set out in subsection 52BAA(5) of the Act, as if references in that subsection to an amount paid for the income stream were references to an amount paid into the specified fund or investment option.

(4) For the purposes of paragraph 52BAB(13)(b) of the Act, the amount is the sum of:

(a) each compounded amount in relation to amounts paid by the individual into the specified fund or investment option; and

(b) each amount paid by the individual into the specified fund or investment option on or after the assessment day.

For this purpose, a compounded amount is worked out by applying the formula set out in subsection 52BAB(14) of the Act, as if references in that subsection to an amount paid for the income stream were references to an amount paid into the specified fund or investment option.

(5) However, if the Commission is satisfied that the lifetime component is not wholly financed by means specified in paragraph (2)(b), the purchase amount is the value that is certified by an actuary who is a Fellow or Accredited Member of the Institute of Actuaries of Australia as being attributable to the individual in relation to the lifetime component under the contract or governing rules for the income stream.