4.9.6.100 Base Amount Payment Splits - Defined Benefit Income Streams

Summary

This topic covers:

  • asset test assessment, and
  • income test assessment.

Note: This section applies only to income streams sourced from superannuation monies.

Asset test assessment

Most defined benefit income streams are exempt from the provisions of the assets test. Queries regarding the calculation of asset values for defined benefit income streams should be referred to the Financial Markets Section in DSS.

Income test assessment

Stage 1 (assessment of income streams between operative time and date of first splittable payment):

  • No income assessed.

Stage 2 (assessment of income streams from date of first splittable payment):

  • At the date of the first splittable payment after the operative time, both the member and the non-member may be entitled to receive a commuted amount from the income stream. If there is still an unsatisfied portion of the base amount remaining after the commutation, this may be split between the member and non-member as a series of 'split' income stream payments, i.e. as a primary FLA and a secondary FLA.
  • The proportions in which these income stream payments are split will be determined according to Division 6.3 of the Family Law (Superannuation) Regulations 2001 (FL(S)R).
  • First splittable payment is assessed as an exempt lump sum and therefore does not feature in the income test. Once the first splittable payment has been made, subsequent split income stream payments will be determined as follows:
Step Description
1 Obtain new gross income for member (1.1.M.118) (primary FLA) and non-member (1.1.N.115) (secondary FLA) respectively.
2

Obtain 'deductible amounts' for each FLA income stream from the provider. The deductible amount for the original FLA is the deductible amount as defined in SSAct section 9(1).

The deductible amounts for the primary FLA and the secondary FLA are calculated by apportioning the deductible amount for the original FLA as follows:

Deductible amount (primary FLA) = Primary FLA payments √∑ Original FLA payments

Deductible amount (secondary FLA) = Secondary FLA payments √∑ Original FLA payments

Where:

  • the primary and secondary FLA payments are those made immediately after the date of the first splittable payment.
3

Calculate assessable income by reducing the gross income of both the primary FLA (member) and secondary FLA (non-member) by the deductible amount (1.1.D.44) calculated for each income stream.

Assessable income = Gross income - Deductible amount

Last reviewed: 21 September 2015