QUESTION:

Does the Abbott government intend to implement proposed deeming changes on income from Account Based Pensions?

ANSWER:

On November 20 the Social Security and Other Legislation Amendment Bill 2013 was introduced and read in the House of Representatives.

The bill proposes a number of changes including:

  • Pension Bonus Scheme:end late registration from 1 March 2014.
  • Extending the deeming rules to account based income streams from 1 January 2015.

This bill will remove the concessional treatment of account based income streams. In relation to annuities, it is intended to only apply to those annuities equivalent to account based pensions.

Other changes are proposed:

  • Paid Parental Leave
  • Australian Working Life Residence extending to 35 years.
  • Tightening of FTB Part A rules. 
  • Pausing of indexation for FTB and Child care.

It is likely this legislation will be passed, but I understand there has been some representation from industry bodies about minor changes. Keep in mind it is only intended to apply to new income streams from 1 January 2015. Most people will be unaffected, but it is certainly a wakeup call to get good advice prior to that date.