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INCOME TAX ASSESSMENT ACT 1997 - SECT 294.200

Cap increment--child recipient on or after 1 July 2017, deceased had transfer balance account

             (1)  A cap increment arises if:

                     (a)  on a day (the starting day ) on or after 1 July 2017, you start to be the * child recipient of a * superannuation income stream; and

                     (b)  the deceased had a * transfer balance account just before death.

Income stream fully funded by deceased's retirement phase interests

             (2)  If the * superannuation interest that supports the * superannuation income stream is wholly attributable to one or more superannuation interests of the deceased that were in the * retirement phase, the amount of the cap increment equals the amount of the * transfer balance credit that arises in your * transfer balance account in respect of the * superannuation income stream.

Income stream fully funded by deceased's accumulation phase interests

             (3)  If the * superannuation interest that supports the * superannuation income stream is wholly attributable to one or more superannuation interests of the deceased that were not in the * retirement phase, the amount of the cap increment is nil.

Note:          A superannuation income stream covered by this subsection will generally result in excess transfer balance. The exceptions are: where you have additional cap increments under section 294-190 or 294-195, or where you have a higher cap under subsection 294-185(2) because you also receive a non-death benefit income stream.

Income stream partly funded by deceased's accumulation interests

             (4)  If the * superannuation interest that supports the * superannuation income stream is:

                     (a)  in part (the retirement phase part ) attributable to a superannuation interest of the deceased that was in the * retirement phase; and

                     (b)  in part attributable to a superannuation interest of the deceased that was not in the retirement phase;

the amount of the cap increment is so much of the * transfer balance credit that arises in your * transfer balance account in respect of the superannuation income stream as represents the retirement phase part.

Note:          A superannuation income stream covered by this subsection will generally result in excess transfer balance. The exceptions are: where you have additional cap increments under section 294-190 or 294-195, or where you have a higher cap under subsection 294-185(2) because you also receive a non-death benefit income stream.

Reduced increment for excess transfer balance

             (5)  Despite subsections (2) and (4), the cap increment is reduced if there was * excess transfer balance in the deceased's * transfer balance account just before death. The amount of the reduction is:

                     (a)  the proportion of the excess transfer balance that corresponds to your share of the deceased's * superannuation interests that were in the * retirement phase; less

                     (b)  the amount of any * superannuation lump sum paid to you, because of the death of the person from a superannuation interest of the deceased that was in the retirement phase.

When cap increment arises

             (6)  The cap increment arises:

                     (a)  on the starting day, unless paragraph (b) applies; or

                     (b)  if you are a reversionary beneficiary--at the end of the period of 12 months beginning on the starting day.

Treatment of investment earnings after death

             (7)  For the purposes of working out under this section the extent to which a * superannuation interest is attributable to another superannuation interest, if:

                     (a)  a superannuation interest of the deceased was in the * retirement phase; and

                     (b)  on or after the death of the deceased, an amount of investment earnings is added to the superannuation interest;

the superannuation interest is taken to include that amount of investment earnings, except to the extent that the amount of investment earnings includes an amount paid under a policy of insurance on the life of the deceased or an amount arising from self-insurance.

Guide to Subdivision 294-F



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