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  • Improving the integrity of retirement income streams

    Transition to retirement income streams (TRIS) are available to assist individuals to gradually move to retirement by accessing a limited amount of super. Previously, where a member received a TRIS, the fund was eligible for tax free earnings on the super assets that supported it.

    Effective 1 July 2017, the government removed the tax-exempt status of earnings from assets that support a TRIS that is not in the retirement phase. Earnings from assets supporting these types of TRIS will be taxed at 15% regardless of the date the TRIS commenced.

    Members are no longer able to treat super income stream payments as lump sums for taxation purposes.

    The intent of this change is to ensure that TRIS are not accessed primarily for tax purposes but for the purpose of supporting individuals who remain in the workforce and are approaching retirement.

    See also:

    Summary of impacts for APRA-regulated funds

    Funds can no longer claim Exempt Current Pension Income (ECPI) from assets supporting a TRIS where the member is not in the retirement phase.

    A TRIS is not in the retirement phase until the member reaches age 65, or notifies their fund that they have satisfied one of the following 'nil' cashing restriction conditions of release:

    • retirement
    • permanent incapacity
    • terminal illness.

    You will need to include income from assets supporting a TRIS that is not in the retirement phase in assessable income. Once the member has met a 'nil' cashing restriction condition of release, the TRIS moves into the retirement phase. The fund is then able to start claiming ECPI on the earnings from assets supporting the TRIS, and the account balance of the TRIS at this date is counted towards the member's transfer balance cap.

    Further impacts:

    • a TRIS is always considered to be a TRIS, even after the member has met a nil cashing restriction condition of release
    • there are related accounting and reporting changes
    • there is a potential movement of assets to be able to comply.
    Last modified: 04 Apr 2018QC 51316