Treasury Laws Amendment (2017 Measures No. 1) Regulations 2017 (F2017L00704)

Schedule 1   Innovative superannuation income streams

Superannuation Industry (Supervision) Regulations 1994

20   After regulation 1.06

Insert:

1.06A Standards for certain innovative superannuation income streams

(1) This regulation applies to either of the following (the governing conditions ):

(a) a contract for the provision of a benefit supported by a superannuation interest (within the meaning of the 1997 Tax Act);

(b) the rules for the provision of a benefit supported by a superannuation interest (within the meaning of that Act).

(2) The governing conditions meet the standards of this subregulation if:

(a) they neither meet the standards in subregulation 1.05(11A) nor the standards in subregulation 1.06(9A) (as applicable); and

(b) they comply with subregulation (3) of this regulation; and

(c) either:

(i) they ensure that payment of the benefit is made at least annually; or

(ii) the benefit is a deferred superannuation income stream.

Note: Paragraph (a) can be complied with for some of the standards referred to in that paragraph if the governing conditions state that they do not meet those standards (see subregulation (5)).

(3) The governing conditions comply with this subregulation if they ensure that:

(a) no payment of the benefit is made before the primarybeneficiary satisfies a condition of release mentioned in item 101, 102, 102A, 103 or 106 of Schedule 1; and

(b) after payments of the benefit start, the benefit is payable throughout the life of thebeneficiary (primary or reversionary); and

(c) the amount of benefit payments is determined using a method that ensures that those payments are not unreasonably deferred after they start, having regard to the following:

(i) to the extent that the payments depend on the returns on investment of the assets supporting the benefit - when the payments are made and when the returns are derived;

(ii) to the extent that the payments depend on the ages, life expectancies or other factors relevant to the mortality of other individuals who are beneficiaries ofthat kind of benefit - the age, life expectancy or other factors relevant to the mortality of each of those other individuals;

(iii) to the extent that the payments do not depend on the returns mentioned in subparagraph (i) or the ages, life expectancies or other factors relevant to mortality mentioned in subparagraph (ii) - the relative sizes of the annual totals of the payments from year to year;

(iv) any other relevant factors; and

(d) if the benefit is commuted on or after the retirement phase start day for the benefit - the commutation amount does not exceed the amount worked out for the benefit under regulation 1.06B; and

(e) if the benefit is commuted before the retirement phase start day for the benefit - the commutation happens only in accordance with the rules set out in regulations 6.16, 6.18, 6.19 and 6.22A, if those rules applied in relation to the benefit as if:

(i) the benefit were in a regulated superannuation fund; and

(ii) the beneficiary were a member of the fund; and

(iii) the provider of the benefit were a trustee of the fund; and

(f) the benefit is transferable to another person only on the death of the beneficiary (primary or reversionary, as applicable); and

(g) the capital value of the benefit and the income from it cannot be used as a security for a borrowing.

(4) However, the governing conditions do not meet the standards of subregulation (2) if, in relation to the death of the beneficiary, the benefit is transferred or paid to a person who would not be eligible under paragraph 6.21(2)(b), or under subregulation 6.21(2A) or (2B), to be paid a benefit.

(5) The governing conditions may state that they do not meet the standards in subparagraph 1.05(11A)(b)(i) or (ii), or in subparagraph 1.06(9A)(b)(i) or (ii), as applicable. For the purposes of this Part, such a statement has effect according to its terms from the day it is made, and continues to have effect whether or not the statement is later changed or removed.

1.06B Maximum commutation amount for certain innovative superannuation income streams

(1) For the purposes of paragraph 1.06A(3)(d), the amount for a commutation of a benefit (the income stream ) is:

(a) if the income stream is commuted during the 14 day period starting on the retirement phase start day for the income stream - the access amount for the income stream at the time of the commutation; or

(b) if the income stream is commuted on the death of the beneficiary within the first half of the life expectancy period for the income stream and paragraph (a) does not apply - the access amount for the income streamat the time of the death; or

(c) otherwise:

(i) the amount worked out for the income stream under subregulation (2); or

(ii) if the amount worked out for the income stream under subregulation (2) is less than or equal to zero - nil.

(2) For the purposes of paragraph (1)(c), the amount for the income stream is worked out using the following formula:

where:

previously commuted amount means the sum of any amounts commuted from the income stream before the time of the commutation.

remaining life expectancy means the number of days remaining in the life expectancy period for the income stream after subtracting the number of days in the period:

(a) starting on the retirement phase start day for the income stream; and

(b) ending on the day of the commutation.