Income Stream Payments

The tax free component is not assessable income and not exempt income in all cases.

 

Age of Recipient	Taxed Element	Untaxed Element
Age 60 and over	Not assessable, not exempt	Taxed at marginal rate with 10% offset
At or above preservation age and under 60	Taxed at marginal tax rates Tax offset of 15%	Taxed at marginal rates No tax offset
Under preservation age	Taxed at marginal tax rates No 15% tax offset unless disability benefit	Taxed at marginal tax rates No tax offset

 

Medicare levy added.

Capped defined benefit income streams

Capped defined benefit income streams have special rules for the $1.6m transfer cap recognising their non-commutable nature. The credit value is determined by multiplying the annual entitlement by a factor of 16. Life expectancy and market-linked have their transfer cap credit value determined by multiplying the annual entitlement by the remaining term. Where the value is in excess of the cap it will not give arise to excess transfer tax but instead will attract additional tax on the income stream.