Start a New Pension/Income Steam – What the Regulations say

At the commencement of the income stream the member can specify what percentage of the accumulation account will be used to commence a pension. Regulation 307-200.05 of the ITAR 1997 provides that once a superannuation income stream ‘commences’, an amount that supports the superannuation income stream is always to be treated as a separate superannuation interest.

The proportioning rule in section 307-125 of the ITAA 1997 requires the tax free and taxable proportions of a superannuation interest to be determined at the time of commencement of the pension. When any benefit is paid from the superannuation interest, the trustees must ensure that the benefit contains the same proportions of tax free and taxable components as the superannuation interest from which it is paid.

Note, when there is an increase in pension assets, due to income, such as interest, dividends, realised or unrealised gains, the tax free and taxable component of the capital of the income stream increases in the same proportion. This means that whatever is the proportion of taxable and tax free components at the time of commencement of income stream, it remains “locked in” till the income stream ceases


About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
This entry was posted in Super Law & Compliance. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s