Document ID: chunk:federal_register_of_legislation:C2025C00029:section:7:p7
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 7 (pt 7/12)
Character Range: 4594903–4597810

A cap increment arises if:
 (a) on a day (the starting day) on or after 1 July 2017, you start to be the *child recipient of a *superannuation income stream; and
 (b) the deceased had a *transfer balance account just before death.

Income stream fully funded by deceased's retirement phase interests
 (2) If the *superannuation interest that supports the *superannuation income stream is wholly attributable to one or more superannuation interests of the deceased that were in the *retirement phase, the amount of the cap increment equals the amount of the *transfer balance credit that arises in your *transfer balance account in respect of the *superannuation income stream.

Income stream fully funded by deceased's accumulation phase interests
 (3) If the *superannuation interest that supports the *superannuation income stream is wholly attributable to one or more superannuation interests of the deceased that were not in the *retirement phase, the amount of the cap increment is nil.
Note: A superannuation income stream covered by this subsection will generally result in excess transfer balance. The exceptions are: where you have additional cap increments under section 294‑190 or 294‑195, or where you have a higher cap under subsection 294‑185(2) because you also receive a non‑death benefit income stream.

Income stream partly funded by deceased's accumulation interests
 (4) If the *superannuation interest that supports the *superannuation income stream is:
 (a) in part (the retirement phase part) attributable to a superannuation interest of the deceased that was in the *retirement phase; and
 (b) in part attributable to a superannuation interest of the deceased that was not in the retirement phase;
the amount of the cap increment is so much of the *transfer balance credit that arises in your *transfer balance account in respect of the superannuation income stream as represents the retirement phase part.
Note: A superannuation income stream covered by this subsection will generally result in excess transfer balance. The exceptions are: where you have additional cap increments under section 294‑190 or 294‑195, or where you have a higher cap under subsection 294‑185(2) because you also receive a non‑death benefit income stream.

Reduced increment for excess transfer balance
 (5) Despite subsections (2) and (4), the cap increment is reduced if there was *excess transfer balance in the deceased's *transfer balance account just before death. The amount of the reduction is:
 (a) the proportion of the excess transfer balance that corresponds to your share of the deceased's *superannuation interests that were in the *retirement phase; less
 (b) the amount of any *superannuation lump sum paid to you, because of the death of the person from a superannuation interest of the deceased that was in the retirement phase.

When cap increment arises
 (6) The cap increment arises: