Reporting for retirement phase income streams
Where a successor fund transfer (SFT) involves members in receipt of superannuation income streams, the income streams stop in the transferring fund, and new ones start directly after in the successor fund. More information regarding how income streams are impacted by IFTs can be found at Intra-fund transfer.
Reporting requirements for retirement phase events will differ depending on the type of income stream a member receives.
As well as the transferring fund reporting the ceasing of the income stream and the successor fund reporting the new income stream using the Member Account Transaction Service (MATS), the relevant closing of the transferred accounts and opening of the new accounts must also occur, using the Member Account Attribute Service (MAAS).
The transferring fund should report the income stream stopped (STO) event before the successor fund reports the new income stream event.
If this does not occur, we will 'double count' the credits in the member's transfer balance account and the member may exceed their transfer balance cap. This may lead to the member having an excess transfer balance and being sent an excess transfer balance determination.
Super funds should follow the steps in the table below.
Transferring fund –retirement phase income stream | Transferring fund – report MATS Retirement Phase Event | Transferring fund – report account as closed using the date income stream ceases as status date | Receiving fund – report account as open using the date income stream starts as status date | Receiving fund – report MATS Retirement Phase event |
|---|---|---|---|---|
Superannuation income stream (SIS) | Income stream stopped (STO) | Close account via MAAS | Open account via MAAS | SIS |
Child death benefit income stream (ICB) | STO | Close account via MAAS | Open account via MAAS | ICB |
Reversionary income stream (IRS) | STO | Close account via MAAS | Open account via MAAS | SIS |
Reversionary child death benefit income stream (ICR) | STO | Close account via MAAS | Open account via MAAS | ICB |
For more information on retirement phase event types, download the Member Account Transaction Service (MATS) Business implementation guide by visiting Superannuation (SPR) | Standard Business Reporting (sbr.gov.au)External Link and accessing ATO SPRMBRACCTX.00001 2018 Business Implementation Guide (DOCX) document.
Reporting an STO event and new income stream
If the transferring fund initially reported an income stream event for the member, the transferring fund will report a STO event upon ceasing the income stream. The effective date of the STO event will be the date the income stream ceases. The debit value of the STO event will be the value of the debit calculated at the date the income stream ceases.
The successor fund will report a new income stream event. The effective date of the new income stream will be the date it starts in the fund, and where possible, be the same date as the STO.
If the effective date that the income stream ceases and the new income stream commences is not the same date, then this may have an adverse impact on any member who has an excess transfer balance at the time of the SFT. An effective date for the new income stream that is a day apart may result in the issue of a new excess transfer balance determination due to the commencement of a new excess transfer balance period. The tax rate is 15% for the first time the member has an excess transfer balance, increasing to 30% if they have an excess transfer balance again.
The debit value of the STO event from the transferring fund and the credit value of the new income stream event from the successor fund would be equal for account-based income streams. For information specific to capped defined benefit income streams refer to SFTs involving capped defined benefit income streams.
For reversionary income stream (IRS) and reversionary child death benefit income stream (ICR) the ATO's application of the initial credit to the individual’s transfer balance account will not be impacted by the SFT arrangement, even if the SFT occurs during the 12 months between the date of death of the member and the credit arising in the individual's transfer balance account.
Transitional arrangement
The ceasing of the income stream in the transferring fund should be reported as a STO (income stream stopping) event and not a MCO (member commutation) event.
To report the cessation of income streams in the transferring fund as a STO event instead of an MCO event, some superannuation providers’ systems may need lead time to update their functionality. If the transferring fund or its administrator is unable to report a STO event, they can lodge an enquiry through our Super Enquiry Service.
SFTs involving capped defined benefit income streams
If the SFT involves a capped defined benefit income stream (CDBIS), the transferring fund must report the ceasing of the income stream debit value, calculated in accordance with section 294-145 of the Income Tax Assessment Act 1997, as a STO event.
The successor fund must report the new income stream credit value equal to the debit value reported by the transferring fund in accordance with section 294-25.03 of the Income Tax Assessment (1997 Act) Regulations 2021.
The transferring fund must report the STO event before the successor fund reports the SIS event.
Example: SFT reporting for CDBIS
Alison commenced a defined benefit lifetime pension (a CDBIS) on 1 July 2021. At the time of commencement, the special value of the income stream was $800,000 and was reported as a transfer balance credit. On 20 July 2024, an SFT occurred, and her defined benefit lifetime pension (or CDBIS) was transferred to another fund. The transferring fund calculated the transfer balance debit value in accordance with section 294-145 of the Income Tax Assessment Act 1997. The debit value was calculated as $800,000.
The successor fund’s systems have been programmed to calculate a special value which applies when a new superannuation income stream is commenced. The successor fund will need to override the special value calculated by its systems to use the debit value provided by the transferring fund. The successor fund will need to report a credit value equal to the debit value for the CDBIS in accordance with section 294-25.03 of the Income Tax Assessment (1997 Act) Regulations 2021. The transferring fund will need to provide the debit value to the successor fund as part of the data migration process during the SFT.
End of exampleReporting for income streams not in retirement phase
Some income streams are not in retirement phase. These are commonly transition to retirement income streams when the member has not met a condition of release with a nil cashing restriction.
As these income streams are not in retirement phase, there is no retirement phase event reporting associated with the income stream stopping in the transferring fund and starting in the receiving fund. Funds can lodge an enquiry through our Super Enquiry Service for guidance if any issues arise.
Minimum pension standards
Transferring fund
The trustee of the transferring fund is responsible for ensuring the minimum pension payment requirements are met for each of the pensions payable from the beginning of the current financial year up to the date of the SFT.
Successor fund
The trustee of the successor fund is responsible for ensuring the minimum pension payment requirements are met. This is for each of the pensions payable from the date of the SFT to the end of the relevant financial year.
An exception to this responsibility is prescribed under section 4 of Schedule 7 to the SISR. This is where the commencement of the new pension is on or after 1 June in the relevant financial year.
The successor fund will need to recalculate the minimum pension payments based on the member account balance at the time of the SFT, or, for an SFT after 1 June, based on the account balance on 1 July the following financial year.
Example: Calculating the pro-rata minimum pension
Fund A is undergoing an SFT to Fund B on 1 August 2021. Member One is in receipt of an account-based pension with a minimum pension amount of $10,000 for the 2021–22 financial year.
The number of days from the beginning of the financial year (1 July 2021) to the day the pension ceases (1 August 2021) is 32. The number of days from the day the pension ceases to the end of the financial year (30 June 2022) is 333.
The Fund A Trustee is required to make a pro-rata minimum pension payment of $876.71 ($10,000 × 32 ÷ 365).
The Fund B Trustee is required to make a pro-rata minimum pension payment of $9,123.29 ($10,000 × 333 ÷ 365).
End of exampleMinimum pension payment requirement not met
If the transferring fund has not met the minimum pension payment requirement before the date of the SFT, the income stream in the transferring fund will be taken to have ceased for income tax purposes at the beginning of the income year. For the consequences for the transferring fund, see If you don't meet the minimum pension payment requirements under the SIS Regulations.
In the successor fund the income stream must be commuted and a new one commenced that meets all the requirements of the SISR. For the consequences for the successor fund, see Meeting the minimum pension payment requirement in subsequent years.
Taxable and tax-free components
Under paragraph 307-125(3)(d) of the ITAA 1997, the new income stream after an SFT will retain the same proportions of taxable and tax-free components as the original income stream.
For super lump sums that did not arise as the result of a commutation of an income stream, the tax-free and taxable components are determined just before the SFT date.
Social security treatment of income streams
For information on the treatment of successor fund transfers for social security purposes, see the Australian Government Social Security GuideExternal Link.
Intra-fund transfer
If you have changed the account identifiers for an income stream but the income stream itself has never ceased, we expect that you will have completed the associated member account reporting (MAAS Close and MAAS Open) for this change. You will need to be able to identify the correct income stream and action any commutation authority that may contain the previous account details.
There are no MATS reporting requirements for retirement phase events when a fund executes an IFT.