Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Veterans' Affairs Legislation Amendment (Further Budget 2000 and Other Measures) Bill 2001
Schedule 3 Income streams

Part 1 Small superannuation accounts

Veterans’ Entitlements Act 1986

1  Section 5 (after the index entry relating to “asset-test exempt income stream”)

Insert:

 

ATO small superannuation account

5J(1)

2  Section 5 (index entry relating to “investment”)

Omit “5J(6)”, substitute “5J(6), (6A)”.

3  Section 5 (after the index entry relating to “investment”)

Insert:

 

Investor

5J(1)

4  Subsection 5J(1)

Insert:

ATO small superannuation account means an account kept in the name of an individual under the Small Superannuation Accounts Act 1995 .

5  Subsection 5J(1) (definition of investment )

Repeal the definition, substitute:

investment :

                     (a)  in relation to a superannuation fund, approved deposit fund or deferred annuity—has the meaning given by subsection (6); or

                     (b)  in relation to an ATO small superannuation account—has the meaning given by subsection (6A).

6  Subsection 5J(1)

Insert:

investor , in relation to an ATO small superannuation account, means the person in whose name the account is kept.

7  Subsection 5J(1) (definition of return )

Repeal the definition, substitute:

return :

                     (a)  in relation to an ATO small superannuation account—means so much of the balance of the account as is attributable to interest; or

                     (b)  in relation to any other investment (including an investment in the nature of superannuation)—means any increase, whether of a capital or income nature and whether or not distributed, in the value or amount of the investment.

8  Subsection 5J(1) (definition of superannuation benefit )

Repeal the definition, substitute:

superannuation benefit , in relation to a person, means:

                     (a)  a benefit arising directly or indirectly from amounts contributed (whether by the person or by any other person) to a superannuation fund in respect of the person; or

                     (b)  a payment under Part 7 of the Small Superannuation Accounts Act 1995 , where the payment is in respect of an ATO small superannuation account kept in the name of the person.

9  At the end of subsection 5J(1B)

Add:

                     (g)  an investment in an ATO small superannuation account.

Note:       See paragraph (1C)(ca) for investments in ATO small superannuation accounts held before pension age is reached.

10  After paragraph 5J(1C)(c)

Insert:

                    (ca)  an investment in an ATO small superannuation account if the investor has not yet turned pension age;

11  After subsection 5J(6)

Insert:

          (6A)  For the purposes of this Act:

                     (a)  a person has an investment in an ATO small superannuation account if:

                              (i)  the account is kept in the name of the person; and

                             (ii)  the balance of the account exceeds nil; and

                     (b)  the amount or value of that investment equals the balance of the account.

12  After paragraph 5J(7)(a)

Insert:

                     (b)  where the investment is an ATO small superannuation account—the balance of the account is taken to have been withdrawn for the purposes of the Small Superannuation Accounts Act 1995 ; or



 

Part 2 Other amendments

Veterans’ Entitlements Act 1986

13  Subsection 5J(1) (paragraph (b) of the definition of income stream )

After “public sector”, insert “superannuation”.

14  Subsection 5JA(1)

Repeal the subsection, substitute:

General requirements

             (1)  An income stream provided to a person is an asset-test exempt income stream for the purposes of this Act if:

                     (a)  it is an income stream arising under a contract, or governing rules, that meet the requirements of subsection (2) and the Commission has not made a determination under subsection (4) in respect of the income stream; and

                     (b)  subject to subsections (1B) and (1C), the Commission is satisfied that in relation to an income stream, provided by a class of provider specified by the Commission for the purposes of this paragraph, there is in force a current actuarial certificate that states that in the actuary’s opinion there is a high probability that the provider of the income stream will be able to pay the income stream as required under the contract or governing rules; and

                     (c)  the Commission is satisfied that the requirements of subsection (2) are being given effect to from the commencement day of the income stream.

Determination under subsection (5)

          (1A)  An income stream provided to a person is an asset-test exempt income stream for the purposes of this Act if the Commission has made a determination under subsection (5) in respect of the income stream.

Guidelines relating to actuarial certificates

          (1B)  The Commission may determine, in writing, guidelines to be complied with when determining whether an actuarial certificate is in force. The determination is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .

Exception if no actuarial certificate in force

          (1C)  Paragraph (1)(b) does not apply if, for a period beginning when an actuarial certificate referred to in this section ceases to be in force and ending not more than 26 weeks later, such an actuarial certificate is not in force.

15  Subparagraph 5JA(2)(h)(i)

Repeal the subparagraph, substitute:

                              (i)  if the income stream is a non-commutation funded income stream and the commutation is made within 6 months after the commencement day of the income stream; or

16  Subparagraph 5JA(2)(h)(iv)

Repeal the subparagraph, substitute:

                            (iv)  to the extent necessary to cover any superannuation contributions surcharge that the person is liable to pay in his or her capacity as purchaser of the income stream; or

                             (v)  to the extent necessary to pay a hardship amount; and

17  At the end of paragraph 5JA(2)(h)

Add:

Note 1:    For non-commutation funded income stream , see subsection (7).

Note 2:    For hardship amount see subsection (7).

18  Paragraph 5JA(2)(i)

Repeal the paragraph, substitute:

                      (i)  that the income stream cannot be transferred to a person except:

                              (i)  on the death of the primary beneficiary, to a reversionary beneficiary; or

                             (ii)  on the death of a reversionary beneficiary, to another reversionary beneficiary; and

19  After subsection 5JA(2)

Insert:

          (2A)  A contract, or the governing rules, for the provision to a person of an income stream that meets all of the requirements of subsection (2), except the requirement of paragraph (2)(c), are taken to meet the requirements of subsection (2) if the contract or governing rules specify that any provision included in the contract or governing rules in accordance with paragraph (2)(c) does not apply in any year in which:

                     (a)  the person ceases to receive income under an income stream jointly and begins to receive income under a single income stream; and

                     (b)  the total amount received in the year under the single income stream is less than the total amount received by the person in the previous year but is not nil.

20  At the end of section 5JA

Add:

Definitions

             (7)  In this section:

hardship amount , in relation to a person, means an amount determined by the Commission for the purposes of this definition if:

                     (a)  the person applies in writing to the Commission to be allowed to commute the whole or part of an income stream because of extreme financial hardship; and

                     (b)  the Commission is satisfied that:

                              (i)  the person’s circumstances are exceptional and could not be reasonably foreseen at the time the person purchased the income stream; and

                             (ii)  the person has insufficient liquid assets or other assets (excluding the person’s principal home) that could be realised to avoid the extreme financial hardship; and

                            (iii)  that amount is required to meet unavoidable expenditure.

liquid assets , in relation to a person, means the person’s cash and readily realisable assets, and includes:

                     (a)  the person’s shares and debentures in a public company; and

                     (b)  managed investments; and

                     (c)  insurance policies that can be surrendered for money; and

                     (d)  amounts deposited with, or lent to, a bank or other financial institution by the person (whether or not the amount can be withdrawn or repaid immediately); and

                     (e)  amounts due, and able to be paid, to the person by, or on behalf of, a former employer of the person.

non-commutation funded income stream means an income stream that has not been purchased by transferring directly to the purchase of the income stream a payment resulting from the commutation of another asset-test exempt income stream.

unavoidable expenditure , in relation to a person, means one or more of the following:

                     (a)  essential medical expenses of the person, or the person’s partner, to the extent that the expenses are not covered by health insurance or other contracts or arrangements;

                     (b)  the cost of:

                              (i)  replacing the person’s principal home; or

                             (ii)  essential repairs to the person’s principal home;

                            to the extent that the cost of the replacement or repairs is not covered by an insurance policy;

                     (c)  expenditure to buy replacement essential household goods because of the loss of those goods to the extent that the cost of replacement is not covered by an insurance policy.

21  Subsection 5JB(1)

Repeal the subsection, substitute:

General requirements

             (1)  An income stream provided to a person is also an asset-test exempt income stream for the purposes of this Act if:

                     (a)  the person has reached pension age on or before the day on which the person purchases or acquires the income stream; and

                     (b)  either subsection (1A) or (1B) applies.

Note 1:       For income stream see subsection 5J(1).

Note 2:       For pension age see subsection (6).

No determination under subsection (3)

          (1A)  This subsection applies if:

                     (a)  the income stream is an income stream arising under a contract, or governing rules, that meet the requirements of subsection (2) and the Commission has not made a determination under subsection (3) in respect of the income stream; and

                     (b)  subject to subsection (1D), the Commission is satisfied that, in relation to an income stream provided by a class of provider specified by the Commission for the purposes of this paragraph, there is in force a current actuarial certificate that states that in the actuary’s opinion there is a high probability that the provider of the income stream will be able to pay the income stream as required under the contract or governing rules; and

                     (c)  the Commission is satisfied that the requirements of subsection (2) have been given effect to from the commencement day of the income stream.

Determination under subsection (4)

          (1B)  This subsection applies if the Commission has made a determination under subsection (4) in respect of the income stream.

Guidelines relating to actuarial certificates

          (1C)  The Commission may determine, in writing, guidelines to be complied with when determining whether an actuarial certificate is in force. The determination is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .

Exception if no actuarial certificate in force

          (1D)  Paragraph (1A)(b) does not apply if, for a period beginning when an actuarial certificate referred to in this section ceases to be in force and ending not more than 26 weeks later, such an actuarial certificate is not in force.

22  Subparagraph 5JB(2)(a)(i)

Repeal the subparagraph, substitute:

                              (i)  if the person’s life expectancy is less than 15 years—throughout a period that is not less than the person’s life expectancy but, if the person’s life expectancy does not consist of a number of whole years, not more than the person’s life expectancy rounded up to the next whole number; or

23  Subparagraph 5JB(2)(h)(i)

Repeal the subparagraph, substitute:

                              (i)  if the income stream is a non-commutation funded income stream and the commutation is made within 6 months after the commencement day of the income stream; or

24  Subparagraphs 5JB(2)(h)(iii) and (iv)

Repeal the subparagraphs, substitute:

                            (iii)  if the legal or equitable interest in the payment resulting from the commutation is transferred on the death of a person to the benefit of a reversionary beneficiary, and on the death of a reversionary beneficiary to the benefit of another reversionary beneficiary or, if there is no other reversionary beneficiary, to the estate of the reversionary beneficiary; or

                            (iv)  if the legal or equitable interest in the payment resulting from the commutation is transferred on the death of a person to the person’s estate and there is no reversionary beneficiary; or

                             (v)  to the extent necessary to cover any superannuation contributions surcharge that the person is liable to pay in his or her capacity as purchaser of the income stream; or

                            (vi)  to the extent necessary to pay a hardship amount; and

25  At the end of paragraph 5JB(2)(h)

Add:

Note 1:    For non-commutation funded income stream , see subsection (7).

Note 2:    For hardship amount see subsection (7).

26  Paragraph 5JB(2)(i)

Repeal the paragraph, substitute:

                      (i)  that the income stream cannot be transferred to a person except:

                              (i)  on the death of the primary beneficiary, to a reversionary beneficiary or, if there is no reversionary beneficiary, to the estate of the primary beneficiary; or

                             (ii)  on the death of a reversionary beneficiary, to another reversionary beneficiary or, if there is no other reversionary beneficiary, to the estate of the reversionary beneficiary; and

27  After subsection 5JB(2)

Insert:

Compliance with subsection (2) if certain conditions are met

          (2A)  A contract, or the governing rules, for the provision to a person of an income stream that meets all of the requirements of subsection (2), except the requirement of paragraph (2)(c), are taken to meet the requirements of subsection (2) if the contract or governing rules specify that any provision included in the contract or governing rules in accordance with paragraph (2)(c) does not apply in any year in which:

                     (a)  the person ceases to receive income under an income stream jointly and begins to receive income under a single income stream; and

                     (b)  the total amount received in the year under the single income stream is less than the total amount received by the person in the previous year but is not nil.

28  At the end of section 5JB

Add:

             (7)  In this section:

hardship amount has the same meaning as in section 5JA (see subsection 5JA(7).

non-commutation funded income stream means an income stream that has not been purchased by transferring directly to the purchase of the income stream a payment resulting from the commutation of another asset-test exempt income stream.

29  After subsection 52C(3)

Insert:

Exception for an asset-tested income stream (long-term)

          (3A)  Subsection (1) does not apply to an asset that is an asset-tested income stream (long-term).

30  At the end of Division 11 of Part IIIB

Add:

Subdivision F Commutation of asset-test exempt income stream

52ZMA   Debt to result from commutation of asset-test exempt income stream

             (1)  If:

                     (a)  a person is provided with an asset-test exempt income stream for a period beginning on the first day in respect of which an income stream payment was made to the person and ending on the last day in respect of which an income stream payment was made to the person; and

                     (b)  during the whole or any part of that period an amount of service pension or income support supplement has been paid to the person; and

                     (c)  the whole or any part of the income stream is commuted contrary to the contract or governing rules under which the income stream was provided on the commencement day of the income stream; and

                     (d)  the amount of service pension or income support supplement that has been paid to the person for that period is more than the amount that would have been payable to the person for that period had the income stream not been an asset-test exempt income stream for the purposes of this Act for that period;

an amount worked out under subsection (2) is a debt due to the Commonwealth.

             (2)  That amount is an amount equal to the difference between the amount of service pension or income support supplement that has been paid to the person during the period worked out under subsection (3) and the amount that would have been so paid to the person had the income stream not been an asset-test exempt income stream for the purposes of this Act for that period.

             (3)  The period for the purposes of subsection (2) is the period beginning on:

                     (a)  the day 5 years before the day the income stream was commuted; or

                     (b)  either:

                              (i)  the commencement day of the income stream; or

                             (ii)  20 September 2001;

whichever occurs later.

             (4)  In working out the asset value of the income stream had the income stream not been an asset-test exempt income stream for the period referred to in subsection (2), assume that the income stream was asset tested from the commencement day and that the asset value of the income stream is depleted in accordance with the formula in subsection 52A(4).

             (5)  This section does not apply to an income stream in relation to which a determination under subsection 5JA(5) or 5JB(4) is in force.

31  Subclause 12(4) of Schedule 5 (definition of binding arrangement )

Repeal the definition, substitute:

binding arrangement , in relation to a person, means:

                     (a)  an arrangement that does not allow the person to commute an income stream; or

                     (b)  an arrangement that may only be terminated on terms that are, in the opinion of the Commission, likely to cause severe detriment to the person.



 

Schedule  4 Rounding off

   

Veterans’ Entitlements Act 1986

1  Subsections 58A(5) and (6)

Repeal the subsections, substitute:

             (5)  The amount worked out under subsection (4) is to be rounded to the nearest cent (rounding half a cent upwards).

2  Subsections 79K(4) and (5)

Repeal the subsections, substitute:

             (4)  The amount worked out under subsection (2) or (3) is to be rounded to the nearest cent (rounding half a cent upwards).

3  Section 79P (example)

Omit “This amount is rounded under section 79R to $34.60”, substitute “(The amount is rounded to the nearest cent under section 79R.)”.

4  Section 79R

Repeal the section, substitute:

79R   Rounding of amounts

                   An amount worked out under this Division is to be rounded to the nearest cent (rounding half a cent upwards).

5  Subpoint SCH6-A1(2) (method statement, note 6)

Omit “off to the nearest multiple of 10 cents (see subsections 58A(2) and (3))”, substitute “to the nearest cent (see subsection 58A(5))”.

6  Subpoint SCH6-A1(3) (method statement, note 1)

Omit “off to the nearest multiple of 10 cents (see subsections 58A(2) and (3))”, substitute “to the nearest cent (see subsection 58A(5))”.

7  Subpoint SCH6-A1(6) (method statement, note 6)

Omit “off to the nearest multiple of 10 cents (see subsections 58A(2) and (3))”, substitute “to the nearest cent (see subsection 58A(5))”.