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Regulations have been registered which will prevent Capped Defined Benefit Income Stream (CDBIS) recipients from having their transfer balances negatively impacted by an involuntary rollover to a successor fund.

Previously, where a CDBIS was involuntarily transferred from one superannuation provider to another via a Successor Fund Transfer (SFT), the value of the new income stream would often be different from the value of the old income stream for transfer balance account purposes. Therefore, in such situations, an SFT could have caused an individual’s transfer balance account to increase or decrease.

Under the new regulations, which apply to SFTs that occur on or after 6 July 2024, when an SFT occurs, the transfer balance credit for commencing the new CDBIS must equal to the transfer balance debit from commuting the old CDBIS.

This amendment will also apply retrospectively in instances where a CDBIS recipient was adversely affected by the previous rules (i.e. the CDBIS recipient’s transfer balance account had increased due to an SFT that occurred before 6 July 2024.)

The ATO has issued Addendum TR 2013/5A1, updating taxation ruling TR 2013/5 Income Tax: when a superannuation income stream commences and ceases.

Taxation Ruling TR 2013/5 has been updated to:

-  include the ATO view on when a superannuation income stream ceases and commences under a successor fund transfer,

-  reflect legislative changes, including the transfer balance cap provisions and the concept of retirement phase for superannuation interests,

-  the sunsetting on 1 April 2021 of the Income Tax Assessment Regulations 1997 (including removing the requirement for a person to make an election for a payment to be treated as a lump sum commutation in regulation 995-03), and replacement with the Income Tax Assessment (1997 Act) Regulations 2021, and

-  contains an appendix on historical legislative changes that have applied in intervening years since the original publication of the ruling in 2013.

The Addendum was issued in draft form in September 2023 and some changes have been made in response to industry feedback.