In Specie Pension Payments?

The ATO has always been of the view that pension payments must be paid in cash (or its equivalent).

Given the view expressed in the final Ruling that a member can “transform” a superannuation income stream benefit into a superannuation lump sum by making an election under Reg 995-1.03 at or before the payment is made, does this mean that the payment (which is to be taxed as a superannuation lump sum) can be paid in specie rather than by cash?

The better (and more cautious) view is that the “transformation” of a superannuation income stream benefit into a superannuation lump sum (via the magic of a Reg 995-1.03 election) only has a “taxation effect”.  The transformation has no impact for SIS purposes.  If so, the payments which have been transformed still need to be paid in cash.

However, partial commutation payments can be paid in specie.  In this case, the pension  (which must be an account-based pension or a transition to retirement income stream, in respect of which an unrestricted release condition has occurred) is partially commuted and an election under Reg 995-1.03 is also made.  The result is that the superannuation lump sum arising from the partial commutation can be paid either in cash, assets or a combination of both.