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TRISs and Traps

From 1 July 2017, the tax exemption for transition to retirement income streams (TRIS) will end. That change was effected by the superannuation reforms which became law on 29 November 2016 (2017 Superannuation Reforms).

The change raises an issue about whether and how a TRIS can become a 'retirement phase' income stream when the pensioner satisfies the relevant condition of release. On 12 April 2017 the Federal Government released its exposure draft legislation, which proposes technical amendments (Draft Amendments) to resolve that issue.

Jessica Leppert, Maddocks Lawyers

The transition to retirement income streams (TRIS)

An individual who has reached preservation age can draw down on their superannuation interests before they retire from the workforce or turn 65.[1] This can be done by the individual commencing one of the following (a TRIS):

  • a transition to retirement income stream;
  • a transition to retirement pension;
  • a non-commutable allocated pension; or
  • a non-commutable allocated annuity.

From 1 July 2017, TRISs will be excluded from the earnings tax exemptions (Tax Exemption) as they are expressly excluded from being considered a 'retirement phase' income stream.[2]

'Once a TRIS, always a TRIS'? Ambiguity created by the 2017 Superannuation Reforms

The 2017 Superannuation Reforms[3] created ambiguity about whether a TRIS could ever qualify as a 'retirement phase' income stream which is eligible for the Tax Exemption.

Advisers have since been fielding and posing a number of questions relevant to this issue:

  1. Does my TRIS automatically convert into an account-based pension when the pensioner satisfies a condition of release with a nil cashing restriction?
  2. Do I need to commute and replace my TRIS with a new (non-TRIS) superannuation income stream?
  3. Once a pension is commenced as a TRIS, will it always be a TRIS?
  4. Is there anything I can do to ensure my TRIS automatically converts to a retirement phase income stream?

Draft Amendments provide the answer

The good news is that the Draft Amendments[4] provide an answer to all these questions: a TRIS will become a retirement phase income stream when the member satisfies the nil condition of release.

Does the Cleardocs TRIS automatically convert to an account-based pension?

This question is somewhat academic as all transition to retirement pensions — assuming they are compliant and reflect the requirements of superannuation law — will automatically convert to a retirement phase income stream.

In response to the ambiguities created by the current legislation, the Cleardocs Pension Pack contains a provision which removes the TRIS provisions from the document when the member satisfied a 'nil' cashing restriction.

However given the clarity provided by the Draft Amendments, the Cleardocs Pension Pack product — with or without the new provision — will provide for automatic conversion to an account-based pension once the Draft Amendments become law.

More information from Maddocks

For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Revenue Practice Group.

More Cleardocs information on related topics

You can read earlier ClearLaw articles on a range of matters.

Also, you can see Guides by Maddocks dealing with:

Order Cleardocs SMSF packages

[1] Superannuation Industry (Supervision) Regulations 1994 and the Retirement Savings Accounts Regulations 1997.

[2] See schedule 8 and section 307-80, Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016.

[3] Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016

[4] Exposure Draft Treasury Laws Amendment (2017 Measures No. 2) Bill 2017.


Lawyer in Profile

Julia Tonkin
Julia Tonkin
+61 3 9258 3318

Qualifications: BA, LLB, University of Melbourne

Julia is a Partner in Maddocks Corporate and Private Clients team. Julia has extensive expertise in:

  • estate planning, structuring for succession of ownership and control of private and family businesses.
  • charities and not-for-profit space.

Julia’s clients include high net worth individuals and families and privately held businesses.

Clients value Julia’s empathic, common sense yet technically sound approach to complex legal (and often interpersonal) issues.

She has been recognised as an Accredited Specialist by The Law Institute of Victoria with an accreditation in Wills & Estates Law. She has also been recognised in Doyles Guide for Wills, Estates & Succession Planning Law Recommended – Victoria in 2023.

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