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Transition to Retirement Pensions - Government Action
The Government has resolved the controversy as to whether transition to retirement income streams (TRISs) can ever qualify for the earnings tax exemption by deciding to amend the relevant legislation.
The issue arose because from 1 July 2017, pensions which are transition to retirement income streams no longer qualify for the earnings tax exemption. If a pension commenced before 1 July 2017 as a transition to retirement income stream would the pension be entitled to the earnings tax exemption if and when the member reached age 65 or satisfied the retirement condition?
Some commentators thought yes, others were doubtful and others (such as ourselves) thought it entirely depended on how the pension was structured.
These differing views will soon become redundant when the relevant legislation is enacted. While the relevant legislation has only been issued as an exposure draft – it was released on 12 April 2017 – it will be enacted in time for 30 June 2017 as the closing date for submissions has already passed.
Once the amendment is effected, transition to retirement income streams will qualify for the earnings tax exemption when the pension recipient satisfies certain release conditions including retirement and attainment of age 65.