4.9.6.60 Payment Splits of Income Streams: Creation by Trustee of New Interest, Transfer/Roll-Over or Lump Sum Payment

Summary

This topic covers:

  • trustee discretion required before 'first split' income stream payment is made, and
  • assessment of payment split income streams.

Trustee discretion required before first split income stream payment is made

Before the first split income stream payment is made, the trustee of the superannuation fund, or, if the income stream is sourced from a retirement savings account, a life office or friendly society, the provider of the original FLA income stream may exercise the discretion under regulation 14G of the Family Law (Superannuation) Regulations 2001 to pay out in full the entitlement of the non-member. This can be done by:

  • creating a new interest (income stream) in favour of the non-member with a value equivalent to that specified in the superannuation agreement or court order (1.1.C.355), or
  • transferring or rolling over an amount equivalent to that specified in the superannuation agreement or court order to another superannuation fund or retirement savings account, to be held for the non-member, or
  • paying a lump sum to the non-member equivalent to that specified in the superannuation agreement or court order.

This action may be taken in relation to either a 'percentage payment split' or a base amount payment split (1.1.B.05).

In each case, the non-member is NOT entitled to any further payments.

There will be NO secondary FLA as the non-member's entitlement has been paid out in full. The payments from the original FLA (now paid to the member as a primary FLA) will be reduced by the amount paid out to the non-member.

Assessment of payment split income streams

Note: Currently, the Financial Markets Helpdesk in DSS undertakes means test assessments for ALL income streams subject to payment splits where the non-member's interest is paid out in full. Centrelink will forward the helpdesk all data necessary to perform the calculations.

The means test assessment of the member's remaining interest (primary FLA), including the methodology and the data necessary to undertake the assessment, is the same as that specified for the member in 4.9.6.20 to 4.9.6.55 in relation to percentage payment splits.

Policy reference: SS Guide 4.9.6.20 Payment splits of income streams: percentage payment splits, 4.9.6.30 Percentage payment splits - non-defined benefit income streams (non-account-based), 4.9.6.40 Percentage payment splits - non-defined benefit income streams (account-based income streams), 4.9.6.50 Percentage Payment Splits - Defined Benefit Income Streams, 4.9.6.55 Percentage Payment Splits - Market-Linked Income Streams

Last reviewed: 21 September 2015