Self-managed superannuation funds - starting and stopping a superannuation income stream (pension)

This document provides information about issues you, as a trustee of a self-managed super fund (SMSF), may need to take into account when a superannuation income stream starts or stops.

References in this document to SMSFs include former SMSFs unless otherwise indicated. This information only applies to taxed, complying super funds which commence a super income stream in the form of an account-based pension on or after 1 July 2007.

Super income stream

A super income stream includes an income stream that is a pension according to the Superannuation Industry (Supervision) Regulations (SIS Regulations).

An income stream cannot be a pension in accordance with the SIS Regulations unless it meets two fundamental requirements - that:

• payment occurs at least annually
• for an account based pension, a minimum amount is paid to the member each year.

We use the term: 'Pension' when referring to the operation of the Superannuation Industry (Supervision) Act 1993 (SIS Act) or SIS Regulations. 'Super income stream' when referring to the operation of the income tax laws.

A super income stream exists when all of the following apply:

• a member is entitled to a series of payments that relate to each other
• the payments are periodic, whether paid annually or more frequently
• the payments are made over an identifiable period of time
• the minimum payment standards of the SIS Regulations have been met.

A liability to make a single payment is not a series of payments and will not satisfy the requirements of being a super income stream. While there must be a continuing liability a super income stream may stop after only one payment.

For more information on starting and stopping a super income stream, refer to: APRA-regulated funds - starting and stopping a superannuation income stream (pension).