Question 1

When can the TIIS be commenced?

Accepted Answer

As soon as the member notifies the Trustee that they are off work due to ill health, whether physical or mental.

Question 2

Can the TIIS be built with a reversion?

Accepted Answer

No as this income stream is only temporary.

Question 3

What are the taxation consequences?

Accepted Answer

The TIIS is not a superannuation benefit and is fully assessable in the hands of the recipient under ordinary income principles. The Trustee may be entitled to a partial deduction for any TIIS payments during an income year and advise should be sought in this regard.

Question 4

What if the Member has a salary continuance insurance policy?

Accepted Answer

The TIIS can be paid alongside any insurance payout to the individual and can be used to ensure that 100% of the member’s salary is provided during the incapacity. Many insurance companies have waiting periods or only pay up to a certain % of the insured’s salary. The TIIS can apply to supplement those payouts or stand-alone if there are no payouts.

Question 5

How long does this document take to assemble?

Accepted Answer

Depending on the complexity of the data, this document should take approximately 30-50 secs to assemble. If you experience timing outside of this please contact Support via the Surge app, alternatively please read this article for troubleshooting tips https://info.lightyeardocs.com.au/supportcentre/troubleshooting-longer-assembly-times-timeouts .

Question 6

What terms and conditions are available for the temporary incapacity income stream?

Accepted Answer

► The member must be a member of the Fund at the time of commencing the income stream
► The member must be engaged in gainful employment (which includes self-employment) and that work has ceased due to ill health, both physical and mental
► The TIIS is to cease when the member goes back to work or self-employment, reaches age 65, retires or becomes permanently incapacitated.
► The trustee must be careful on where the monies come from in terms of paying the income stream and be mindful of the minimum benefit rules in Part 5 of the SIS Regulations
► The amount to be paid can only equal the salary, wages or earnings prior to the temporary incapacity
► Any income is to be paid no later than monthly and may be indexed according to the regulations

Question 7

Is this document a legal document?

Accepted Answer

All master documents have been signed off by LY Legal lawyers. Tony Anamourlis of LY Legal advises that “at no time, due to inbuilt legal protection and security measures can a user change or amend a document on the LYD platform that has been signed off by a practicing solicitor. To do so would result in the user drafting a document of a legal nature and engaging in the provision of legal services. In addition, it would be a breach of copyright. In our opinion when completing the form fields through the LYD platform, users and their employees are merely carrying out an administrative task which is not the provision of legal advice.”

However in some complex areas such as the insertion of a varied range of client instructions into a Will or other such documents the user must be mindful of the extent to which a document is being drafted by the user rather than merely the administrative task of completing a form where the relevant fields are inserted into the reviewed and signed legal document provided by LY Legal.

The above advice is born out of numerous cases dating back to Re Sanderson, Ex parte Law Institute of Victoria [1927] VLR 394, 397 where the Court held:

“if a person does a thing usually done by a solicitor, and does it in such a way as to lead to the reasonable inference that he is a solicitor – if he combines professing to be a solicitor with action usually taken by a solicitor – I think he then does act as a solicitor.”

Likewise in ACCC v Murray (2002) 121 FCR 428, 448 where Murray was building a franchise business that involved the legal writing and drafting of Wills from scratch based on the client’s personal circumstances. The Court held that this process was legal work.

Question 8

Is the document easy to read?

Accepted Answer

All LYD products are written in plain English and assessed for readability. If at any time you come across any errors, please contact support@lyd.com.au.

Question 9

What lawyers sign off on LYD documents?

Accepted Answer

All LYD documents are prepared and signed off by LY Legal.

Question 10

Are the LYD documents reviewed regularly?

Accepted Answer

All LYD documents form part of the LYD internal review process. We review all documents at least annually or when required to do so due to changes in legislation. Further details of this process and a review schedule is include on this website.

Question 11

Can I get a sample of this document?

Accepted Answer

Yes, please email support@lyd.com.au to request a sample document for you to review.

Temporary Incapacity Income Stream