Law change commencing 5 April 2022
The Treasury Laws Amendment (Allowing Commutation of Certain Income Streams) Regulations 2022External Link was registered on 4 April 2022 and commenced on 5 April 2022.
The regulations include changes to the Superannuation Industry (Supervision) Regulations 1994 and the Tax Administration Act 1953 that allow super funds to:
- change the timing of certain debit and credit events in a member's transfer balance account
- commute excess transfer balance amounts for certain income streams in response to a Commissioner's commutation authority (CCA).
Who this change applies to
This law change impacts the following 3 transfer balance account events:
- A member was in receipt of a market linked pension or annuity, a life expectancy pension or annuity, or a lifetime pension or annuity (the original credit) before 1 July 2017 which is a capped defined benefit income stream (CDBIS).
- The member commuted this CDBIS on or after 1 July 2017 (the debit).
- The member commenced a new pension or annuity that is affected product (a market linked pension or annuity or a life expectancy pension or annuity) (the new credit).
Where any of these events have occurred, funds are required to report, or in some cases, correct previously reported events because of this law change.
How to report events prior to the law change
The reported effective start date should be 5 April 2022 for events where the commutation of the original pension and commencement of the new affected pension occurred prior to the commencement of the regulations on 5 April 2022.
Funds need to check their records and determine if any of these events have occurred prior to 5 April 2022. Where necessary, funds need to either:
- correct their existing reporting
- report these events for the first time.
When the fund will need to re-report
We have determined there are 3 main situations where the fund will need to re-report:
The commutation or new pension have not been reported
If you have not reported either the commutation (debit value) or the credit that arises when the member commences the new pension or annuity (the new credit), then you will need to report the value of both the debit and the new credit on commencement of the new pension or annuity, with a reported effective date of 5 April 2022.
Nil commutation reported but not the new pension
If you have reported the commutation debit value as nil and not reported the credit that arose when the member commenced the new pension or annuity, then you will need to re-report the actual value of the debit and report the credit on commencement of the new pension or annuity, both with a reported effective date of 5 April 2022.
How to report events that occurred on or after 5 April 2022
Funds that hold any affected products may be required to report events in the future if the member decides to commute their pension and commence a new affected pension.
Should this occur, funds are required to follow the usual transfer balance account reporting requirements. The effective date of each event will be the date that the event occurred.
Apply the Treasury Laws Amendment (Allowing Commutation of Certain Income Streams) Regulations 2022 to superannuation.