SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS 1994

PART 1A - ANNUITIES AND PENSIONS  

Division 1A.1  

REGULATION 1.05   MEANING OF ANNUITY (ACT, S 10)  

1.05(1)  


A benefit that is provided by a life insurance company or a registered organisation is taken to be an annuity for the purposes of the Act if:


(a) it arises under a contract that:


(i) meets the standards of subregulation (11A) or 1.06A(2) ; and

(ii) does not permit the capital supporting the annuity to be added to by way of contribution or rollover after the annuity has commenced; and


(b) for a benefit purchased on or after 3 August 1993 and before 1 July 2007 - it is purchased with the whole or part of a rolled over amount within the meaning given to that term by section 27A of the Tax Act; and


(c) for a benefit purchased on or after 1 July 2007 - it is purchased with the whole or part of:


(i) a roll-over superannuation benefit within the meaning of the 1997 Tax Act; or

(ii) a directed termination payment within the meaning of the Income Tax (Transitional Provisions) Act 1997 ; and


(d) in the case of a contract to which paragraph (11A)(a) applies and that meets the standards of subregulation (11A) - the contract also meets the standards of regulation 1.07D ; and


(e) in the case of a contract to which paragraph (11A)(b) applies and that meets the standards of subregulation (11A) - the contract also meets the standards of regulation 1.07B .

1.05(1A)  


A benefit that is provided by a life insurance company or a registered organisation that commenced to be paid before 20 September 2007 is taken to be an annuity for the purposes of the Act if:


(a) it arises under a contract that meets the standards of subregulation (2), (4), (6), (7), (8), (9) or (10); and


(b) for a benefit purchased on or after 3 August 1993 and before 1 July 2007 - it is purchased with the whole or part of a rolled over amount within the meaning given to that term by section 27A of the Tax Act; and


(c) for a benefit purchased on or after 1 July 2007 and before 20 September 2007 - it is purchased with the whole or part of:


(i) a roll-over superannuation benefit within the meaning of the 1997 Tax Act; or

(ii) a directed termination payment within the meaning of the Income Tax (Transitional Provisions) Act 1997 ; and


(d) for a benefit that arises under a contract that meets the standards of subregulation (9) and is purchased by the primary beneficiary on or after 20 September 1998 - the commencement day under the contract is the day when the benefit was purchased; and


(e) for a benefit that arises under a contract that meets the standards of subregulation (4) - the contract also meets the standards of regulation 1.07A ; and


(f) for a benefit that arises under a contract that meets the standards of subregulation (2), (6), (7) or (9) - the contract also meets the standards of regulation 1.07B ; and


(g) for a benefit that arises under a contract that meets the standards of subregulation (8):


(i) the benefit can be taken to consist of two benefits:

(A) an annuity that arises from that part of the contract that provides for payments whose size is not fixed; and

(B) an annuity that arises from that part of the contract that provides for payments whose size in a year is fixed; and

(ii) the contract meets the standards of regulation 1.07A in relation to the annuity mentioned in sub-subparagraph (i)(A); and

(iii) the contract meets the standards of regulation 1.07B in relation to the annuity mentioned in sub-subparagraph (i)(B); and


(h) for a benefit that arises under a contract that meets the standards of subregulation (10), and has a commencement day on or after 20 September 2004 - the contract also meets the standards of regulation 1.07C .

1.05(1B)  


A benefit provided by a life insurance company or registered organisation that commenced to be paid on or after 20 September 2007 is taken to be an annuity for the purposes of the Act if:


(a) the benefit arises under a contract that meets the standards of:


(i) subregulation 1.05(9) or (10) ; and

(ii) subregulation 1.05(11A) ; and


(b) the benefit was purchased with a rollover superannuation benefit that resulted from the commutation of:


(i) an annuity provided under a contract that meets the standards of subregulation 1.05(2) , (9) or (10) ; or

(ii) a pension provided under rules that meet the standards of subregulation 1.06(2) , (7) or (8) ; or

(iii) a pension provided under terms and conditions that meet the standards of subregulation 1.07(3A) of the RSA Regulations; and


(c) for a benefit that arises under a contract that meets the standards of subregulation (9) - the contract also meets the standards of regulation 1.07B ; and


(d) for a benefit that arises under a contract that meets the standards of subregulation (10) - the contract also meets the standards of regulation 1.07C .

1.05(2)  
A contract for the provision of a benefit (in this subregulation called the annuity ) meets the standards of this subregulation if it ensures that:


(a) the annuity is paid at least annually throughout the life of the primary beneficiary in accordance with paragraphs (b) and (c) and, if there is a reversionary beneficiary:


(i) throughout the reversionary beneficiary ' s life; or

(ii) if he or she is a child of the primary beneficiary or of a former reversionary beneficiary under the annuity - at least until his or her 16th birthday; or

(iii) if the person referred to in subparagraph (ii) is a full-time student at age 16 - at least until the end of his or her full-time studies or until his or her 25th birthday (whichever occurs sooner); and


(b) the size of payments of benefit in a year is fixed, allowing for variation only:


(i) as specified in the contract; or

(ii) to allow commutation to pay a superannuation contributions surcharge; or

(iii) to allow an amount to be paid under a payment split and reasonable fees in respect of the payment split to be charged; and


(c) unless APRA otherwise approves, the sum payable as benefit in each year to the primary beneficiary or to the reversionary beneficiary, as the case may be, is:


(i) if CPI c is not less than CPI p - not less than SP p ; or

(ii) if CPI c is less than CPI p - not less than:


  CPI c
CPI p
× SP p

where:

CPI c means the quarterly CPI first published by the Australian Statistician for the second-last quarter before the day on which payment is to be made.

CPI p means the quarterly CPI first published by the Australian Statistician for the same quarter in the immediately preceding year.

SP p means the sum payable in the immediately preceding year;

and


(d) the amount paid as the purchase price is wholly converted into annuity income; and


(e) the annuity does not have a residual capital value; and


(f) the annuity cannot be commuted except in any of the following circumstances:


(i) the annuity is not funded from the commutation of:

(A) an annuity that meets the standards of this subregulation or subregulation (3), (9) or (10); or

(B) a pension that meets the standards of subregulation 1.06(2) , (3) , (7) or (8) ; or

(C) a pension that meets the standards of subregulation 1.07(3A) of the RSA Regulations;
and the commutation is made within 6 months after the commencement day of the annuity;

(ii) the commutation is made to the benefit of a reversionary beneficiary on the death of the primary beneficiary and within one of the following periods after the commencement day of the annuity:

(A) if the primary beneficiary ' s life expectancy on the commencement day, rounded up to the next whole number, is a period less than 20 years - that period;

(B) in any other case - 20 years;

(iii) the superannuation lump sum resulting from the commutation is transferred directly for the purpose of purchasing another benefit provided under:

(A) a contract that meets the standards of this subregulation or subregulation (3), (9) or (10); or

(B) rules that meet the standards of subregulation 1.06(2) , (3) , (7) or (8) ; or

(C) terms and conditions that meet the standards of subregulation 1.07(3A) of the RSA Regulations;

(iv) to pay a superannuation contributions surcharge;

(v) to give effect to an entitlement of a non-member spouse under a payment split;

(vi) for the purpose of paying an amount under Division 131 or 135 in Schedule 1 to the Taxation Administration Act 1953 , or section 292-80C of the Income Tax (Transitional Provisions) Act 1997 , to give effect to a release authority in respect of the primary beneficiary;

(vii) the annuity was commenced in contravention of Part 6 and the commutation would result in an obligation to pay an amount to the Commissioner of Taxation under subsection 20F(1) of the Superannuation (Unclaimed Money and Lost Members) Act 1999 ; and


(g) if the annuity reverts or is commuted, it does not have a reversionary component greater than 100% of the benefit that was payable before the reversion or the commutation; and


(h) the annuity cannot be transferred to a person other than a reversionary beneficiary on the death of the primary beneficiary or of another reversionary beneficiary; and


(i) the capital value of the annuity, and the income from it, cannot be used as security for a borrowing.

1.05(3)  
For the purpose of determining whether an annuity meets the standards in subregulation (2), it is immaterial that:


(a) if the primary beneficiary dies within the period used for subparagraph (2)(f)(ii), a surviving reversionary beneficiary may obtain a payment equal to the total payments that the primary beneficiary would have received, if the primary beneficiary had not died, from the day of the death until the end of the period; and


(b) if the primary beneficiary dies within the period used for subparagraph (2)(f)(ii) and there is no surviving reversionary beneficiary, an amount, not exceeding the difference between the sum of the amounts paid to the primary beneficiary and the sum of the amounts that would have been so payable in the period, is payable to the primary beneficiary ' s estate; and


(c) if the primary beneficiary dies within the period used for subparagraph (2)(f)(ii) and there is a surviving reversionary beneficiary who also dies within that period, there is payable to the reversionary beneficiary ' s estate an amount determined as described in paragraph (b) as if that paragraph applied to the reversionary beneficiary.

1.05(4)  
A contract for the provision of a benefit (in this subregulation called the annuity ):


(a) that does not meet the standards in subregulation (2); and


(b) that does not fix the size of payments of benefit in a year; and


(c) under which the commencement day is on or after 22 December 1992;

meets the standards of this subregulation if the contract at least ensures that:


(d) the standards in paragraphs (2)(h) and (i) are met; and


(e) payments are made at least annually; and


(f) for an annuity that has a commencement day on or after 22 December 1992 and before 1 January 2006 - the payments in a year (excluding payments by way of commutation but including payments made under a payment split) are not larger or smaller in total than, respectively, the maximum and minimum limits calculated in accordance with Schedule 1A ; and


(g) for an annuity that has a commencement day on or after 1 January 2006 - the payments in a year (excluding payments by way of commutation but including payments made under a payment split) are not larger or smaller in total than the following:


(i) for payments made during the period starting on 1 January 2006 and ending on 30 June 2006 - the respective maximum and minimum limits for the year calculated in accordance with 1 of the following Schedules:

(A) Schedule 1A ;

(B) Schedule 1AAB ;

(ii) for payments made on or after 1 July 2006 - the respective maximum and minimum limits for the year calculated in accordance with Schedule 1AAB .
Note:

22 December 1992 was the date of Royal Assent to the Taxation Laws Amendment (Superannuation) Act 1992 .

1.05(5)  
For the purpose of determining whether an annuity meets the standards in subregulation (4), it is immaterial:


(a) that:


(i) the commencement day of the annuity occurs on or after 1 June in a financial year; and

(ii) the contract does not ensure that payments in that financial year meet the standard in that subregulation for the minimum amount; or


(b) that the contract does not ensure that the payments in the year in which the annuity is to end meet the standard in that subregulation for the minimum amount.

1.05(6)  
A contract for the provision of a benefit (in this subregulation called the annuity ):


(a) that does not meet the standards of subregulation (2); and


(b) that fixes the size of the payments of benefit in a year, allowing for variation only as specified in the contract or to allow payments to be made under a payment split; and


(c) under which the commencement day is on or after 1 July 1994;

meets the standards of this subregulation if the contract at least ensures that:


(d) the standards in paragraphs (2)(g), (h) and (i) are met; and


(e) except in relation to payments, by way of commutation, for superannuation contributions surcharge, variation in payments from year to year does not exceed, in any year, the average rate of increase of the CPI in the preceding 3 years; and


(f) payments in accordance with paragraph (b) are made at least annually; and


(g) the amount paid as the purchase price is wholly converted into annuity income.

1.05(7)  
A contract for the provision of a benefit (in this subregulation called the annuity ) that:


(a) does not meet the standards of subregulation (2); and


(b) provides for payments whose size in a year is fixed, allowing for variation only as specified in the contract; and


(c) provides for additional payments (in this subregulation called bonus payments );


(d) the commencement day of which is on or after 1 July 1994;

meets the standards of this subregulation if it at least ensures that:


(e) in respect of the fixed-size payments - the standards in subregulation (6) are met; and


(f) the fixed-size payments amount to at least 50% of:


(i) if the provider provides annuities of the kind specified in subregulation (6) - the amount that would be payable if the annuity were wholly of that kind; or

(ii) if the provider does not provide annuities of the kind specified in subregulation (6) - the fixed-size payments are at least equal in amount to 50% of the interest payable on Commonwealth bonds that have the same value as the purchase price of the annuity and that most closely correspond in term to the term of the annuity; and


(g) the amounts of the bonus payments (if any) are reasonably proportional to the investment income from which the payments purport to be derived; and


(h) the amount of a bonus payment (if any) is notified in writing by the provider each year and is paid to the beneficiary in the year next following (except when deferral of the payment would not result, in any future year, in the rate of increase in size of the total payments for the year exceeding the average rate of increase of the CPI in the preceding 3 years).

1.05(8)  
A contract for the provision of a benefit (in this subregulation called the annuity ):


(a) that does not meet all the standards in any other provision of this regulation; and


(b) under which the commencement day is on or after 22 December 1992; and


(c) that provides for:


(i) payments whose size in a year is fixed, allowing for variation only as specified in the contract; and

(ii) additional payments whose size is not fixed, derived from the application of part of the purchase price to investments by allocation of the annuity provider;

meets the standards of this subregulation if it at least ensures that:


(d) in respect of fixed-size payments - if the commencement day is on or after I July 1994, the standards in subregulation (6) are met; and


(e) in respect of payments whose size is not fixed - the standards in subregulation (4) are met.

Note:

22 December 1992 was the date of Royal Assent to the Taxation Laws Amendment (Superannuation) Act 1992 .

1.05(9)  


A contract for the provision of a benefit (in this subregulation called the annuity ) meets the standards of this subregulation if the contract ensures that:


(a) for an annuity that has a commencement day before 20 September 2004:


(i) if the life expectancy of the primary beneficiary on the commencement day is less than 15 years - the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary ' s life expectancy on the commencement day, rounded up, at the primary beneficiary ' s option, to the next whole number if the primary beneficiary ' s life expectancy does not consist of a whole number of years; or

(ii) if the life expectancy of the primary beneficiary on the commencement day is 15 years or more - the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period that is not less than 15 years but not more than the primary beneficiary ' s life expectancy on the commencement day, rounded up, at the primary beneficiary ' s option, to the next whole number if the primary beneficiary ' s life expectancy does not consist of a whole number of years; and


(b) for an annuity that has a commencement day on or after 20 September 2004:


(i) the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary ' s life expectancy on the commencement day, rounded up to the next whole number if the primary beneficiary ' s life expectancy does not consist of a whole number of years; or

(ii) the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary ' s life expectancy mentioned in subparagraph (i) calculated, at the option of the primary beneficiary, as if the primary beneficiary were up to 5 years younger on the commencement day; or

(iia) if the annuity has a commencement day on or after 1 January 2006 - the annuity is paid at least annually to the primary beneficiary or reversionary beneficiary throughout a period that is not less than the period available under subparagraph 1.05(9)(b)(i), and not more than the greater of the following periods:

(A) the maximum period available under subparagraph 1.05(9)(b)(ii);

(B) the period of years equal to the number that is the difference between the age attained by the primary beneficiary at his or her most recent birthday before the commencement day, and 100; or

(iii) if:

(A) the annuity is an annuity that reverts to a surviving spouse on the death of the primary beneficiary; and

(B) the life expectancy of the primary beneficiary ' s spouse is greater than the life expectancy of the primary beneficiary; and

(C) the primary beneficiary has not chosen to make an arrangement mentioned in subparagraph (i), (ii) or (iia) for the annuity;
the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to:

(D) the life expectancy of the spouse on the commencement day; or

(E) the life expectancy of the spouse calculated, at the option of the primary beneficiary, as if the spouse were up to 5 years younger on the commencement day; or

(F) if the annuity has a commencement day on or after 1 January 2006 - a period that is not less than the period available under sub-subparagraph 1.05(9)(b)(iii)(D), and not more than the greater of the following periods:

(I) the maximum period available under sub-subparagraph 1.05(9)(b)(iii)(E);

(II) the period of years equal to the number that is the difference between the age attained by the spouse at his or her most recent birthday before the commencement day, and 100;
at the option of the primary beneficiary, and rounded up to the next whole number if the life expectancy of the spouse, or the period, does not consist of a whole number of years; and


(c) the total amount of the payment, or payments, to be made in the first year after the commencement day (not taking commuted amounts into account) is fixed and that payment, or the first of those payments, relates to the period commencing on the day the benefit was purchased; and


(d) the total amount of the payments to be made in a year other than the first year after the commencement day (not taking commuted amounts into account) does not fall below the total amount of the payments made in the immediately preceding year (the previous total ), and does not exceed the previous total:


(i) if CPI c is less than or equal to 4% - by more than 5% of the previous total; or

(ii) if CPI c is more than 4% - by more than CPI c + 1%;
where:
CPI c is the change (if any), expressed as a percentage, determined by comparing the quarterly CPI first published by the Australian Statistician for the second-last quarter before the day on which the first of those payments is to be made and the quarterly CPI first published by the Australian Statistician for the same quarter in the immediately preceding year;
and


(e) the total amount of the payments to be made in a year in accordance with paragraph (c) or (d) may be varied only:


(i) to allow commutation to pay a superannuation contributions surcharge; or

(ii) to allow an amount to be paid under a payment split and reasonable fees to be charged in respect of the payment split; and


(f) the amount paid as the purchase price is wholly converted into annuity income; and


(g) the annuity does not have a residual capital value; and


(h) the annuity cannot be commuted except in any of the following circumstances:


(i) the annuity is not funded from the commutation of:

(A) an annuity that meets the standards of this subregulation or subregulation (2), (3) or (10); or

(B) a pension that meets the standards of subregulation 1.06(2) , (3) , (7) or (8) ; or

(C) a pension that meets the standards of subregulation 1.07(3A) of the RSA Regulations;
and the commutation is made within 6 months after the commencement day of the annuity;

(ii) subject to subparagraph (iv), by payment, on the death of the primary beneficiary, to the benefit of a reversionary beneficiary or, if there is no reversionary beneficiary, to the estate of the primary beneficiary;

(iii) subject to subparagraph (iv), by payment, 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;

(iv) for subparagraphs (ii) and (iii), if the primary beneficiary has opted, under subparagraph (b)(iii), for a period worked out in relation to the life expectancy or age of the primary beneficiary ' s spouse - the annuity cannot be commuted until the death of both the primary beneficiary and the spouse;

(v) the superannuation lump sum resulting from the commutation is transferred directly to the purchase of another benefit that is:

(A) an annuity provided under a contract that meets the standards of subregulation (2), (3) or (10) or this subregulation; or

(B) a pension that is provided under rules that meet the standards of subregulation 1.06(2) , (3) , (7) or (8) ; or

(C) a pension that is provided under terms and conditions that meet the standards of subregulation 1.07(3A) of the RSA Regulations;

(vi) to pay a superannuation contributions surcharge;

(vii) to give effect to an entitlement of a non-member spouse under a payment split;

(viii) for the purpose of paying an amount under Division 131 or 135 in Schedule 1 to the Taxation Administration Act 1953 , or section 292-80C of the Income Tax (Transitional Provisions) Act 1997 , to give effect to a release authority in respect of the primary beneficiary;

(ix) the annuity was commenced in contravention of Part 6 and the commutation would result in an obligation to pay an amount to the Commissioner of Taxation under subsection 20F(1) of the Superannuation (Unclaimed Money and Lost Members) Act 1999 ; and


(i) if the annuity reverts, it does not have a reversionary component greater than 100% of the benefit that was payable before the reversion; and


(j) if the annuity is commuted, the commuted amount cannot exceed the benefit that was payable immediately before the commutation; and


(k) the annuity 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


(l) the capital value of the annuity, and the income from it, cannot be used as security for a borrowing.

1.05(10)  


A contract for the provision of a benefit ( market linked annuity ) meets the standards of this subregulation if the contract ensures that:


(a) the market linked annuity:


(i) is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary ' s life expectancy on the commencement day of the annuity, rounded up to the next whole number if the primary beneficiary ' s life expectancy does not consist of a whole number of years; or

(ii) is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary ' s life expectancy mentioned in subparagraph (i) calculated, at the option of the primary beneficiary, as if the primary beneficiary were up to 5 years younger on the commencement day; or

(iia) if the annuity has a commencement day on or after 1 January 2006 - the annuity is paid at least annually to the primary beneficiary or reversionary beneficiary throughout a period that is not less than the period available under subparagraph 1.05(10)(a)(i), and not more than the greater of the following periods:

(A) the maximum period available under subparagraph 1.05(10)(a)(ii);

(B) the period of years equal to the number that is the difference between the age attained by the primary beneficiary at his or her most recent birthday before the commencement day, and 100; or

(iii) if:

(A) the annuity is an annuity that reverts to a surviving spouse on the death of the primary beneficiary; and

(B) the life expectancy of the primary beneficiary ' s spouse is greater than the life expectancy of the primary beneficiary; and

(C) the primary beneficiary has not chosen to make an arrangement mentioned in subparagraph (i), (ii) or (iia) for the annuity;
the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to:

(D) the life expectancy of the spouse on the commencement day; or

(E) the life expectancy of the spouse calculated, at the option of the primary beneficiary, as if the spouse were up to 5 years younger on the commencement day; or

(F) if the annuity has a commencement day on or after 1 January 2006 - a period that is not less than the period available under sub-subparagraph 1.05(10)(a)(iii)(D), and not more than the greater of the following periods:

(A) the maximum period available under sub-subparagraph 1.05(10)(a)(iii)(E);

(B) the period of years equal to the number that is the difference between the age attained by the spouse at his or her most recent birthday before the commencement day, and 100;
at the option of the primary beneficiary, and rounded up to the next whole number if the life expectancy of the spouse, or the period, does not consist of a whole number of years; and


(b) the total amount of the payments to be made in a year (excluding payments by way of commutation but including payments made under a payment split) is determined in accordance with Schedule 6 ; and


(c) the market linked annuity does not have a residual capital value; and


(d) the market linked annuity cannot be commuted except in any of the following circumstances:


(i) the annuity is not funded from the commutation of:

(A) another annuity that is provided under a contract that meets the standards of subregulation (2), (3) or (9) or this subregulation; or

(B) a pension that is provided under rules that meet the standards of subregulation 1.06(2) , (3) , (7) or (8) ; or

(C) a pension that is provided under terms and conditions that meet the standards of subregulation 1.07(3A) of the RSA Regulations;
and the commutation is made within 6 months after the commencement day of the annuity;

(ii) subject to subparagraph (iii), on the death of the primary beneficiary or reversionary beneficiary, by payment of:

(A) a lump sum or a new annuity to one or more dependants of either the primary beneficiary or reversionary beneficiary; or

(B) a lump sum to the legal personal representative of either the primary beneficiary or reversionary beneficiary; or

(C) if, after making reasonable enquiries, the provider of the annuity is unable to find a person mentioned in sub-subparagraph (A) or (B) - a lump sum to another individual;

(iii) for subparagraph (ii), if the primary beneficiary has opted, under subparagraph (a)(iii), for a period worked out in relation to the life expectancy or age of the primary beneficiary ' s spouse - the market linked annuity cannot be commuted until the death of both the primary beneficiary and the spouse;

(iv) the superannuation lump sum resulting from the commutation is transferred directly to the purchase of another benefit that is:

(A) an annuity provided under a contract that meets the standards of subregulation 1.05(2) , (3) or (9) or this subregulation; or

(B) a pension that is provided under rules that meet the standards of subregulation 1.06(2) , (3) , (7) or (8) ; or

(C) a pension that is provided under terms and conditions that meet the standards of subregulation 1.07(3A) of the RSA Regulations;

(v) to pay a superannuation contributions surcharge;

(vi) to give effect to an entitlement of a non-member spouse under a payment split;

(vii) for the purpose of paying an amount under Division 131 or 135 in Schedule 1 to the Taxation Administration Act 1953 , or section 292-80C of the Income Tax (Transitional Provisions) Act 1997 , to give effect to a release authority in respect of the primary beneficiary;

(viii) the annuity was commenced in contravention of Part 6 and the commutation would result in an obligation to pay an amount to the Commissioner of Taxation under subsection 20F(1) of the Superannuation (Unclaimed Money and Lost Members) Act 1999 ; and


(e) if the market linked annuity reverts, it does not have a reversionary component greater than 100% of the account balance immediately before the reversion; and


(f) if the market linked annuity is commuted, the commutation amount cannot exceed the account balance immediately before the commutation; and


(g) the market linked annuity can be transferred only:


(i) on the death of the primary beneficiary:

(A) to 1 of the dependants of the primary beneficiary; or

(B) to the legal personal representative of the primary beneficiary; or

(ii) on the death of the reversionary beneficiary:

(A) to 1 of the dependants of the reversionary beneficiary; or

(B) to the legal personal representative of the reversionary beneficiary; and


(h) the capital value of the market linked annuity, and the income from it, cannot be used as security for a borrowing.

1.05(11)  


A contract mentioned in subregulation (10) is not prevented from meeting the standards of that subregulation by reason only that the contract provides that, if the commencement day of the annuity is on or after 1 June in a financial year, no payment is required to be made for that financial year.

1.05(11A)  


A contract for the provision of a benefit (the annuity ) meets the standards of this subregulation if the contract ensures that payment of the annuity is made at least annually, and also ensures that:


(a) for an annuity in relation to which there is an account balance attributable to the annuitant - the total of payments in any year (excluding payments by way of commutation but including payments under a payment split) is at least the amount calculated under clause 1 of Schedule 7 ; and


(b) for an annuity that is not described in paragraph (a):


(i) both of the following apply:

(A) the contract does not provide for a residual capital value, commutation value or withdrawal benefit greater than 100% of the purchase price of the annuity;

(B) the total of payments in any year (excluding payments by way of commutation but including payments under a payment split) is at least the amount calculated under clause 2 of Schedule 7 ; or

(ii) each of the following applies:

(A) the annuity is payable throughout the life of the beneficiary (primary or reversionary), or for a fixed term of years that is no greater than the difference between the primary beneficiary ' s age on the commencement day and age 100;

(B) the amount paid as the purchase price is wholly converted into annuity payments;

(C) there is no arrangement for an amount (or a percentage of the purchase price) prescribed by the contract to be returned to the recipient when the annuity ends;

(D) the total of payments from the annuity in the first year (excluding payments by way of commutation but including payments under a payment split) is at least the amount calculated under clause 2 of Schedule 7 ;

(E) the total of payments from the annuity in a subsequent year cannot vary from the total of payments in the previous year unless the variation is as a result of an indexation arrangement or the transfer of the annuity to another person;

(F) if the annuity is commuted, the commutation amount cannot exceed the benefit that was payable immediately before the commutation; or

(iii) the standards of subregulation (2) are met; and


(c) the annuity is transferable to another person only on the death of the beneficiary (primary or reversionary, as the case may be); and


(d) the capital value of the annuity and the income from it cannot be used as a security for a borrowing.

1.05(11B)  


A contract for the provision of a benefit does not meet the standards of any of subregulations (2) to (11A) if, in relation to the death of the annuity recipient on or after 1 July 2007, the annuity is transferred or paid to a person who would not be eligible to be paid a benefit in the form of an annuity under paragraph 6.21(2)(b) or subregulation 6.21(2A) or (2B) .

1.05(12)  


Despite section 7 of the Income Tax Assessment (1936 Act) Regulation 2015 , for an annuity that has a commencement day on or after 20 September 2004 and on or before 31 December 2004, one of the following life tables are to be used in ascertaining the life expectancy of a person under this regulation:


(a) the most recently published Australian Life Tables;


(b) the 1995 - 97 Australian Life Tables .

1.05(13)  


In this regulation:

indexation arrangement
, in relation to an annuity, means an arrangement specified in the contract for the provision of the annuity that:


(a) results in the total amount of annuity payments in each year:


(i) increasing by the same percentage factor; or

(ii) being adjusted in line with movements in the Consumer Price Index; or

(iii) being adjusted in line with movements in an index of average weekly earnings published by the Australian Statistician; or

(iv) being adjusted in accordance with subparagraph (ii) or (iii) but with an increase capped at a maximum level; and


(b) ensures that, unless APRA otherwise approves, an adjustment is made at least annually to the amount of the annuity payments.




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