Commonwealth Numbered Acts Commonwealth Numbered Acts
Veterans’ Entitlements Act 1986
1 Subsection 5J(1C) (note 4)
Omit “46V”, substitute “46VA”.
2 Paragraph 5JB(2B)(c)
Repeal the paragraph, substitute:
(c) is at most as long as the greater of:
(i) what would be the primary beneficiary’s life expectancy (rounded up, if not consisting of a whole number of years, to the next whole number) on the commencement day if the primary beneficiary were 5 years younger; and
(ii) the period (rounded up, if not consisting of a whole number of years, to the next whole number) starting on the commencement day and ending on the day on which the primary beneficiary reaches age 100 (assuming that the primary beneficiary lives until then).
3 Paragraph 5JB(2C)(c)
Repeal the paragraph, substitute:
(c) is at most as long as the period worked out under subsection (2D).
4 After subsection 5JB(2C)
Insert:
(2D) For the purposes of paragraph (2C)(c), the period is the greater of:
(a) the greater of what would be the life expectancies (rounded up, if not consisting of a whole number of years, to the next whole number), on the commencement day, of:
(i) the primary beneficiary, if the primary beneficiary were 5 years younger; and
(ii) the primary beneficiary’s reversionary partner on that day, if the partner were 5 years younger; and
(b) the greater of:
(i) the period (rounded up, if not consisting of a whole number of years, to the next whole number) starting on the commencement day and ending on the day on which the primary beneficiary reaches age 100 (assuming that the primary beneficiary lives until then); and
(ii) the period (rounded up, if not consisting of a whole number of years, to the next whole number) starting on the commencement day and ending on the day on which the primary beneficiary’s reversionary partner on the commencement day reaches age 100 (assuming that the partner lives until then).
5 Paragraph 5JBA(3)(c)
Repeal the paragraph, substitute:
(c) is at most as long as the greater of:
(i) what would be the primary beneficiary’s life expectancy (rounded up, if not consisting of a whole number of years, to the next whole number) on the commencement day if the primary beneficiary were 5 years younger; and
(ii) the period (rounded up, if not consisting of a whole number of years, to the next whole number) starting on the commencement day and ending on the day on which the primary beneficiary reaches age 100 (assuming that the primary beneficiary lives until then).
6 Paragraph 5JBA(4)(c)
Repeal the paragraph, substitute:
(c) is at most as long as the period worked out under subsection (4A).
7 After subsection 5JBA(4)
Insert:
(4A) For the purposes of paragraph (4)(c), the period is the greater of:
(a) the greater of what would be the life expectancies (rounded up, if not consisting of a whole number of years, to the next whole number), on the commencement day, of:
(i) the primary beneficiary, if the primary beneficiary were 5 years younger; and
(ii) the primary beneficiary’s reversionary partner on that day, if the partner were 5 years younger; and
(b) the greater of:
(i) the period (rounded up, if not consisting of a whole number of years, to the next whole number) starting on the commencement day and ending on the day on which the primary beneficiary reaches age 100 (assuming that the primary beneficiary lives until then); and
(ii) the period (rounded up, if not consisting of a whole number of years, to the next whole number) starting on the commencement day and ending on the day on which the primary beneficiary’s reversionary partner on the commencement day reaches age 100 (assuming that the partner lives until then).
8 Subsection 5JBA(5)
Omit “equal”, substitute “not be less than 90%, nor greater than 110%, of”.
9 Subsection 5JBA(6)
Omit “the total amount”, substitute “a total amount”.
10 Paragraph 5JBA(8)(a)
Omit “the total amount”, substitute “a total amount”.
11 Section 46T
Before “For the purpose”, insert “(1)”.
12 At the end of section 46T
Add:
(2) Sections 46U and 46V do not apply if:
(a) the income stream is covered by subsection 5JBA(1); or
(b) on the income stream’s commencement day, there was a reasonable likelihood that the income stream would have been covered by subsection 5JBA(1), but the income stream is no longer covered by that subsection.
Note: See section 46VA.
13 After section 46V
Insert:
46VA Income from market‑linked asset‑test exempt income stream
(1) If either of the following conditions is satisfied in relation to the asset‑test exempt income stream to which this Subdivision applies:
(a) the income stream is covered by subsection 5JBA(1);
(b) on the income stream’s commencement day, there was a reasonable likelihood that the income stream would have been covered by subsection 5JBA(1), but the income stream is no longer covered by that subsection;
the annual rate of ordinary income of a person from the income stream is worked out under whichever of subsections (2) and (3) is applicable.
Recipient makes election
(2) If:
(a) the person has elected that a particular amount is to be the payment, or the total of the payments, to be made under the income stream in respect of a period (the payment period ) that:
(i) consists of the whole or a part of a particular financial year; and
(ii) begins on or after the income stream’s commencement day; and
(b) the election is in force on a particular day in the payment period;
the annual rate of ordinary income of the person from the income stream on that day is worked out using the following formula:
where:
"purchase price" has the meaning given by subsection 5J(1).
"relevant number" has the meaning given by subsection 5J(1).
"total payments" means the payment, or the total of the payments, to be made under the income stream in respect of the payment period.
Recipient does not make election
(3) If the person has not elected that a particular amount is to be the payment, or the total of the payments, to be made under the income stream in respect of a period (the payment period ) that:
(a) consists of the whole or a part of a particular financial year; and
(b) begins on or after the income stream’s commencement day;
the annual rate of ordinary income of the person from the income stream on each day during the payment period is worked out using the following formula:
where:
"default amount" means 100% of the amount worked out for the financial year using the formula in subsection 5JBA(5) (for pro-rating, see subsection (4)).
"purchase price" has the meaning given by subsection 5J(1).
"relevant number" has the meaning given by subsection 5J(1).
(4) If the income stream’s commencement day is not a 1 July, the default amount (within the meaning of subsection (3)) for the financial year starting on the preceding 1 July must be reduced on a pro‑rata basis by reference to the number of days in the financial year that are on and after the commencement day.
Exception—income stream’s commencement day happens in June
(5) If:
(a) the income stream’s commencement day happens in June; and
(b) no payment is made under the income stream for the financial year in which the commencement day happens;
subsections (2), (3) and (4) do not apply in working out the annual rate of ordinary income of the person from the income stream on a day in that financial year.
14 Application of amendments
(1) The amendments made by items 2, 3 and 4 apply to income streams purchased, or acquired, by or for the primary beneficiary or primary beneficiaries on or after 1 January 2006.
(2) The amendments made by items 5, 6 and 7 apply to income streams purchased, or acquired, by or for the primary beneficiary on or after 1 January 2006.
(3) The amendments made by items 1 and 11 to 13 apply in working out the annual rate of ordinary income of a person from an income stream on or after 1 January 2006, whether the income stream was purchased, or acquired, by or for the primary beneficiary before, at or after the commencement of this item.
(4) The amendments made by items 8, 9 and 10 apply in working out if obligations for the making of payments under an income stream satisfied the requirements of subsections 5JBA(5) to (9) of the Veterans’ Entitlements Act 1986 on or after 1 January 2006, whether the income stream was purchased, or acquired, by or for the primary beneficiary before, at or after the commencement of this item.
Minister’s second reading speech made in—
House of Representatives on 16 February 2006
Senate on 29 March 2006
| (6/06) |