The Federal Government's latest development of regulation for new retirement income streams is now open for public consultation.
Adding to the existing draft legislation, the government has proposed that superannuation funds and insurance companies receive a tax exemption on income from assets supporting the new products on the condition they are currently payable or held for an individual that has reached retirement, such as deferred products.
In announcing the new regulations, Minister for Revenue and Financial Services Kelly O'Dwyer encouraged the industry to cast submissions in order to shape the reforms as effectively as possible.
"These new rules will remove taxation barriers to the development of new products that will provide greater flexibility in the design of income stream products to give more choice to consumers, while ensuring income is provided throughout retirement," O'Dwyer said.
"The development of these new products is a precursor to the development of comprehensive income stream products for retirement, or CIPRs."
The new tax exemptions will allow for deferred products to be included as a superannuation income stream, as the current definition only applies to common law income streams which are currently payable.
The government has also introduced a rule by which the amount of benefit payments is determined using a method ensuring there is no unreasonable deferral of payments from the income stream once they have commenced.
"This rule is designed to ensure that a genuine retirement income stream is provided to a beneficiary, with benefit payments being set in a manner that does not circumvent the commutation rules or provide estate planning benefits," the explanatory memorandum reads.
Factors that will be considered include the extent payments depend on the returns on an investment of the assets supporting the benefit; the extent that payments depend on the ages or life expectancies of other individuals; the extent that payments do not depend on returns, age or life expectancies - the relative sizes of annual total payments from year to year; and any other relevant factors.
The amount of capital that can be accessed through a lump sum commutation or a commutation of an amount rolled over within the superannuation system will also be restricted from the day that the primary beneficiary of the income stream enters the retirement phase.
Submissions are open until 12 April 2017, with the view to legislate by 1 July 2017.