The reason for the different treatment arises because capped defined benefit income streams generally cannot be commuted and cashed as a lump sum.Ĩ. Instead of excess capped defined benefit income streams causing a breach of your transfer balance cap that needs to be remedied by removing the excess transfer balance, modifications result in certain amounts being included in assessable income and adjustments to the availability of tax offsets. Instead, modifications to the general transfer balance cap rules apply. Capped defined benefit income streams cannot, of themselves, result in you having an excess transfer balance.
The transfer balance cap regime is designed to limit the amount of your superannuation that can be moved into the retirement phase, where it benefits from the fund earnings tax exemption. As with other types of superannuation income streams, the value of capped defined benefit income streams count towards your transfer balance cap. Ī pension for the purposes of the Retirement Savings Accounts Act 1997 that is provided under terms and conditions that meet the standards of subregulation 1.07(3A) of the Retirement Savings Accounts Regulations 1997. Īn annuity for the purposes of the SISA that is provided under a contract that meets the standards of subregulation 1.05(10) of the SISR. Ī pension for the purposes of the SISA that is provided under rules that meet the standards of subregulation 1.06(8) of the SISR. Īn annuity for the purposes of the SISA that is provided under a contract that meets the standards of subregulation 1.05(9) of the SISR. This Ruling covers the following products that are non-commutable, capped defined benefit income streams, provided it was payable just before 1 July 2017: Ī pension for the purposes of the Superannuation Industry (Supervision) Act 1993 (SISA) that is provided under rules that meet the standards of subregulation 1.06(7) of the Superannuation Industry (Supervision) Regulations 1994 (SISR).
Defined benefit income is a superannuation income stream benefit that is paid from a capped defined benefit income stream. All references are to the Income Tax Assessment Act 1997, unless otherwise stated.ģ. The guidance follows changes made to the income tax treatment of certain defined benefit income stream benefits from the 2017-18 financial year.Ģ.
This Ruling clarifies how the defined benefit income cap applies to superannuation income stream pensions or annuities that are paid from life expectancy or market linked products that are non-commutable. If you rely on this Ruling in good faith, you will not have to pay any underpaid tax, penalties or interest in respect of matters covered by the Ruling if it does not correctly state how a relevant provision applies to you.ġ. This Ruling describes how the Commissioner will apply the amendments made by the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 (the Act) to entities that rely on it in good faith. This Ruling is a public ruling for the purposes of the Taxation Administration Act 1953.
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