8Asset‑test exempt income stream resulting from original asset‑test exempt income stream purchased before 20 September 2004

8 Asset‑test exempt income stream resulting from original asset‑test exempt income stream purchased before 20 September 2004

(1) These Principles cover an asset‑test exempt income stream if: (a) the income stream (the present income stream) is covered by section 5JA or 5JB of the Act; and (b) it is purchased by the primary beneficiary on or after 20 September 2004 from funds arising from the commutation of another asset‑test exempt income stream (the original income stream); and (c) the original income stream was purchased before 20 September 2004; and (d) the original income stream is a kind of income stream to which one of the following subsections applies. (2) This subsection applies to an original income stream if: (a) it is covered by subsection 5JA(1) or (1A) or section 5JB of the Act; and (b) it was purchased by the primary beneficiary for the benefit of the primary beneficiary and a reversionary beneficiary; and (c) payments made under the income stream are calculated on the basis of the life expectancy of the reversionary beneficiary; and (d) the reversionary beneficiary predeceases the primary beneficiary. (3) This subsection applies to an original income stream if: (a) it is covered by subsection 5JA(1) or (1A) or section 5JB of the Act; and (b) it is not an income stream to which section 10 or 11 of these Principles applies; and (c) 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 (d) the primary beneficiary and reversionary beneficiary are no longer members of a couple together.

Note: Example

Note: On 1 March 2002, J purchased an income stream (the original income stream) covered by subsection 5JA(1) of the Act for the benefit of J, the primary beneficiary, and H, the reversionary beneficiary. At the time of the purchase, J and H were members of a couple together. On 1 December 2005, J and H ceased to be members of a couple together. On 15 December 2005, J commutes the original income stream and purchases another income stream (the new income stream) covered by subsection 5JA(1) of the Act. The new income stream is covered by these Principles and retains the 100% exemption from the assets test under the Act.

(4) This subsection applies to an original income stream if: (a) it is a defined benefit pension covered by section 5JA or 5JB of the Act that is provided by a regulated superannuation fund; and (b) it is an income stream in relation to which the Commission is not satisfied that the applicable requirements under paragraph 5JA(1)(b) or 5JB(1A)(b) of the Act, are met.

Note: Example

Note: On 1 March 2002, P purchased a 100% asset-test exempt income stream (the original income stream) that is a defined benefit pension covered by section 5JA of the Act that is provided by a regulated superannuation fund. Paragraph 5JA(1)(b) of the Act applies to the original income stream. On 1 September 2022, the Commission is not satisfied that the requirements of paragraph 5JA(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 5JA of the Act. The new income stream is covered by these Principles and retains the 100% exemption from the assets test under the Act.