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The Determination notes that where the market value of segregated assets exceeds the pension account balance, the excess assets cannot qualify as segregated assets.
An asset will be segregated when the asset is "invested, held in reserve or otherwise dealt with" to support its liabilities in respect of superannuation income streams.
The payment of general fund expenses from a segregated bank account will not cause the bank account to cease to qualify as a segregated asset.
The Determination raises the prospect that the ATO may seek to apply Part IVA to asset disposals where the asset was only recently segregated prior to the disposal.
As a general statement where a fund has both pension interests and non-pension interests, it will be better to have two separate bank accounts.
Two or more segregated assets could be pooled to support more than one pension interest.
It is possible for a pension interest to only partially be supported by segregated assets.
As segregation occurs on an asset by asset basis, the decision of the trustee to segregate an asset must specifically identify the asset.
However, the existence of reserves (investment, operational risk, etc) means that not all assets will be segregated assets.
Trustees must initiate the segregation of an asset. Segregation requires a decision of the trustee and implementation of that decision.
A single asset could become a segregated asset on, say, 1 January of a financial year.
It is not possible to retrospectively segregate an asset.
One particular share in a company can be segregated while another share in the same company need not be segregated.
If the fund holds real estate - then either the real estate is segregated or it is not segregated.
Segregation occurs on an asset by asset basis.
A superannuation lump sum arising from a partial commutation will count towards satisfying the minimum pension payment limit. This is the effect of Self Managed Superannuation Funds Determination 2013/2.
As the final Ruling provides that a member may exercise the election under Reg 995-1.03 (to treat a payment from an income stream as a superannuation lump sum rather than as a superannuation income stream benefit), whether or not the payment arises from a commutation, it is now possible to have payments from an account-based pension paid before age 60 taxed as superannuation lump sums rather than as pension benefits.
The ATO has always been of the view that pension payments must be paid in cash (or its equivalent).
It is possible for a member receiving a pension to elect to have a payment from the super interest supporting the pension to be taxed as a superannuation lump sum rather than as a superannuation income stream payment. This is provided by Taxation Regulation 995-1.03(b).
The Draft Ruling expressly dealt with the position where the member had a binding death benefit nomination which required the benefit to be paid as a pension.