We recognise and welcome the amendments made to incorporate legislative amendments flowing from the introduction of the transfer balance cap regime. However, it should not be the responsibility of taxpayers to bear the consequences of the Commissioner's delays in updating guidance to reflect new law and practices. At a minimum, the Commissioner needs to ensure that updates to TR 2013/5 do not apply retrospectively to disadvantage recipients of account-based income streams.

We are particularly concerned with the change in ATO view that where a pension fails to comply with the pension standards, an account-based income stream ceases for income tax purposes only, but not necessarily for superannuation purposes.

• We would like to draw the ATO’s attention to the following issues which require urgent attention:
• The interpretation of the term ‘ensure’ in sub regulation 1.06(9A) of the Superannuation Industry (Supervision) Regulations 1994 (“SISR 1994”)
• The meaning of ‘valid commutation’
• The lack of guidance on the timing and application of the ‘separate interest’ 2 rule
• The need for guidance on issues specifically related to death benefit income streams
• The retrospective application of the ATO views

The Commissioner’s view on when a pension ceases due to the failure to make minimum pension payments remains problematic. TR 2013/5 lacks clear legislative backing, and its reliance on regulation 1.06(9A) appears to be an overreach, adding unnecessary complexity without providing practical benefit.

In our view, a pension is a contractual obligation between a trustee and a member. If minimum payments are missed, the pension does not cease - rather, the trustee is in breach of its contractual obligation, with any unpaid amounts remaining a debt owed to the member.