Tax Exemption on Earnings of Assets Supporting Transition to Retirement Income Streams

Budget measure

  • Removing the tax exemption on earnings of assets supporting Transition to Retirement Income Streams from 1 July 2017 (income streams of individuals over preservation age but not retired). See Improve integrity of transition to retirement income streams on the Budget 2016–17 website fact sheet page.

Our understanding

From 1 July 2017, Transition to Retirement (TTR) income streams will no longer receive the same tax concessions as account based pensions. That is, their investment earnings will no longer be tax free.

TTR income streams will receive the same tax treatment as accumulation schemes and be subject to 15% tax on investment earnings. This change applies irrespective of when the TTR income stream commenced (no grandfathering rules will apply).

Money held in a TTR income stream will not count towards the Transfer Balance Cap.