Income streams

These are regular payments made from your superannuation fund, or purchased using either superannuation or other money.

Types of income streams

Different types of income streams have different effects on your assets test and income test for payments from us.

Income streams include:

  • account based pensions or allocated pensions
  • account based annuities or allocated annuities
  • market linked pensions or term allocated pensions
  • defined benefit pensions – for example from public sector superannuation schemes and private sector defined benefit funds
  • non defined benefit pensions

There are 2 main types of income streams – superannuation pensions and annuities.

Superannuation pensions

These are income streams paid or purchased from a super fund.

Annuities

These are income streams purchased from life companies. You can buy them with either ordinary money or superannuation money.

Assets and income tests

When we test your assets and income, we treat different types of income streams in different ways, based on their features. There are 3 categories:

  • exempt, and partly exempt from the assets test
  • asset tested long term
  • asset tested short term

Exempt and partly exempt from the assets test

This category is for income streams that meet all the rules in sections 9A, 9B or 9BA of the Social Security Act.

Assets test

If you bought it:

  • before 20 September 2004, it doesn’t count in the assets test
  • after 20 September 2004 and before 20 September 2007, half of its value counts in the assets test
  • on or after 20 September 2007, it doesn’t fit in this category. It all counts in the assets test

Income test

We calculate the amount we use depending on whether the income stream is:

  • a non-defined benefit
  • a defined benefit

For a non-defined benefit, it is the gross payment you get, minus your capital returns.

For a defined benefit, it is the gross payment you get, minus the deductible amount.

The deductible amount for defined benefits is the tax-free component of your income stream, calculated by your superannuation fund. This is capped at 10% of the income stream’s gross payments. The cap doesn’t apply to military defined benefit income streams.

Asset tested long term

This category is for income streams that:

  • aren’t exempt or partly exempt from the assets test
  • have a term of:
    • more than 5 years, or
    • 5 years or less if the term is greater than or equal to your life expectancy

Assets test

The whole income stream counts in the assets test.

The asset value is the:

  • account balance if the income stream has an account balance, for example account based and market linked income streams, or
  • purchase price of the income stream, reduced every 6 or 12 months by the amount of capital returns

If your income stream has a residual capital value, the asset value is at least this amount.

Income test

We use the gross payment you get, minus your capital returns, if the income stream is:

  • non-account based
  • account based, if it started before 1 January 2015 and you got a pension or allowance without a break since 31 December 2014

We use the deeming rules for account based income streams and treat them as financial assets if:

  • it started on or after 1 January 2015
  • you didn’t get your payment from us for any reason, including due to earnings, at any time after 31 December 2014

Asset tested short term

This category is for income streams that:

  • aren’t exempt or partly exempt from the assets test
  • aren’t assets tested long term

Assets test

The whole income stream counts in the assets test.

The asset value is the purchase price of the income stream, reduced every 6 or 12 months by the amount of capital returns.

If your income stream has a residual capital value, the asset value is at least this amount.

Income test

We treat these income streams as financial assets and use the deeming rules.

These are general guidelines only. For more information, visit a service centre or call the Financial Information Service.

What you need to tell us

If you get a new income stream

If you buy or start an income stream, you need to tell us where you transferred the money from to pay for it.

You also need to give us your income stream schedule from:

  • your income stream provider
  • the trustee or administrator of your self managed super fund
  • the trustee of your small APRA fund

You can get them to provide these details on:

If you take money out

If you take out more than your regular payments, you need to tell us:

  • how much money you withdrew
  • what you did with this money

If your income stream expires

If your income stream term ends and you get any of the purchase price back, you need to tell us:

  • how much money you got back
  • what you did with this money

Find out more

Read more about income streams on the:

Page last updated: 28 August 2017