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  • 7 Australian annuities and superannuation income streams 2018

    This question is about income you received from annuities and superannuation income streams.

    Australian annuities (also called non-superannuation annuities) are paid to you by Australian life insurance companies and friendly societies. These payments are shown on your PAYG payment summary – individual non-business.

    Australian superannuation income streams (including lump sum in arrears amounts) are paid to you by Australian superannuation funds, retirement savings account (RSA) providers and or life insurance companies. These payments are shown on your PAYG payment summary – superannuation income stream and may include:

    • account based income streams
    • capped defined benefit income streams that are
      • lifetime pensions, regardless of when they started
      • lifetime annuities that existed prior to 1 July 2017
      • life expectancy pensions and annuities that existed prior to 1 July 2017
      • market-linked pensions and annuities that existed prior to 1 July 2017.
       

    If you received a taxable Australian superannuation lump sum payment, do not show it here; show it at question 8.

    Did you receive Australian annuities or superannuation income streams?

    No

    Go to question 8 Australian superannuation lump sum payments 2018, or return to the main menu Individual tax return instructions 2018.

    Yes

    Read on.

    Answering this question

    This question is divided into four parts. The amount to be included in your income tax return is dependent on the type of superannuation income stream you receive.

    The following outlines the parts that you will need to complete based on the superannuation income stream received. Where you received multiple superannuation income streams, you may be required to complete some or all of the parts:

    Complete parts A and B if you received:

    • A superannuation income stream (including death benefit income streams) – for example an account based pension and not a capped defined benefit income stream that is covered below
    • an Australian annuity.

    Do not show the following tax-free amounts (unless instructed otherwise) where you are receiving a superannuation income stream (including death benefit income streams) and:

    • you received a taxed element after your 60th birthday (these amounts are tax free and not included in your taxable income)
    • you received a taxed element paid to you as the result of the death of another person who died aged 60 years old or older or if you were 60 years old or older when you received the benefit (these amounts are tax free and not included in your taxable income)
    • you received a tax-free component (these amounts are tax free and not included in your taxable income).

    Complete parts A and B if all of the following apply:

    • you received a capped defined benefit income stream
    • you were aged 59 years or younger for all of 2017–18 (including if you have a death benefit income stream(s) where the deceased was also aged 59 or younger at the time of death).

    Complete parts A and C if all of the following apply:

    • you received a capped defined benefit income stream
    • you were aged 60 years old or older for all of 2017–18
    • you were in receipt of your income stream for all of 2017–18.

    Complete parts A and D if you received a capped defined benefit income stream, and at least one of the following apply:

    • you turned 60 years old during 2017–18
    • you were 60 years old or older for all of 2017–18 and started an income stream for the first time during the year
    • you were 59 years or younger and have a death benefit income stream where the deceased died at age 60 or older. This will be indicated on your payment summary as Death benefit (Reversionary income stream).

    Additional requirements

    You may be entitled to a tax offset if you received a superannuation income stream lump sum in arrears. However, you need to provide additional information.

    • On a separate sheet of paper
      • print Schedule of additional information – Item 7
      • print your name, address and tax file number
      • write the amount of the payment in arrears for each income year involved.
        For example, if you received $900 in 2017–18 as a lump sum in arrears, where $600 of that lump sum is due for 2015–16 and $300 for 2016–17, write 2015–16 $600 and 2016–17 $300. If you do not have that information, contact the payer of your superannuation income stream.
       
    • Attach your schedule of additional information to page 3 of your tax return.
    • Print X in the Yes box at Taxpayer's declaration question 2 on page 10 of your tax return.

    You may be entitled to an additional tax offset if you are aged 60 or over and you received a PAYG superannuation income stream payment summary with an untaxed element and your income stream is not a capped defined benefit income stream (contact your fund if you don't know).

    • On a separate sheet of paper
      • print Schedule of additional information – Item 7
      • print your name, address and tax file number
      • write the superannuation income stream provider name and the untaxed element amount.
       
    • Attach your schedule of additional information to page 3 of your tax return.
    • Print X in the Yes box at Taxpayer's declaration question 2 on page 10 of your tax return.

    Completing your tax return

    You will need:

    • for annuities
      • all your PAYG payment summary – individual non-business which show the amount of your annuity and its undeducted purchase price (UPP)
       
    • for superannuation income streams
      • all your PAYG payment summary – superannuation income stream.
       

    Part A

    Add up the tax withheld amounts on your payment summaries.

    Write the total in the left hand column under Tax withheld at item 7.

    Part B

    Step 1

    Add up the taxed element amounts that appear on your superannuation income stream payment summaries under the heading Taxable component.

    Write the total at J item 7.

    Step 2
    Worksheet 1

    Row

    Calculation

    Amount

    a

    Add the total of your untaxed elements.

    $

    b

    Write 0 if you did not receive any Australian annuities

    or

    if you did receive Australian annuities, take the deductible amount of the annuity’s UPP away from the gross amount shown on the payment summary. Write 0 if the result is negative.

    $

    c

    Add a and b.

    $

    Write the amount at c to N item 7.

    Step 3

    Add up all the taxed element amounts that appear on your superannuation income stream payment summaries under the heading Lump sum in arrears – taxable component.

    Write the total at Y item 7.

    Step 4

    Add up the untaxed element amounts that appear on your superannuation income stream payment summaries under the heading Lump sum in arrears – taxable component.

    Write the total at Z item 7.

    Part C

    Your defined benefit income cap is set at $100,000 for the 2017–18 income year. The Defined benefit income cap tool can assist you when calculating your assessable income from a capped defined benefit income stream.

    Do not show amounts at:

    • J item 7 (taxed element)
    • Y item 7 (lump sum in arrears taxed element).

    These amounts will be taken into consideration when calculating your assessable amount from a capped defined benefit income stream.

    Step 1
    Worksheet 2

    Row

    Calculation

    Amount

    a

    Add the tax free component plus the taxed element from all your income streams, including lump sum in arrears.

    $

    b

    Your defined benefit income cap

    $100,000

    c

    Subtract b from a.

    If the result is less than or equal to $1, write 0 at c and d.

    $

    d

    Divide c by 2.

    This is your Assessable amount from your capped defined benefit income stream.

    $

    Write the total from d at M item 7.

    Step 2

    Add up all your untaxed elements that appear under the heading Taxable component and Lump sum in arrears – taxable component including Lump sum in arrears – untaxed element.

    Write the total at Z item 7.

    Part D

    Reduction of your defined benefit income cap

    Your defined benefit income cap of $100,000 for 2017–18 may be reduced.

    Worksheet 3A, 3B and Worksheet 4 (if required) will assist in calculating the amount of assessable income to be included at M item 7, based on your defined benefit income cap.

    If you:

    • were 60 years old or older for all of 2017–18 and you started a capped defined benefit income stream during the year – Complete a in worksheet 3A and continue completing the worksheet as directed.
    • were receiving a capped defined benefit income stream and you turned 60 during 2017–18 – Complete b in worksheet 3A and continue completing the worksheet as directed.
    • were aged 59 years or younger and you have a capped defined benefit income stream which is a death benefit income stream where the deceased died aged 60 or over (referred to in this Part as 'reversionary income stream') – Complete c in worksheet 3A and continue completing the worksheet as directed.
    Step 1
    Worksheet 3A

    Row

    Calculation

    Days

    a

    Work out the number of days from when you first started to receive a superannuation income stream to 30 June 2018 (if you have more than one of these superannuation income streams, then work out the number of days using the income stream which you started the earliest.)

     

    b

    Work out the number of days from your birthday to 30 June 2018.

     

    c

    Work out the number of days from when you first started to receive a reversionary income stream to 30 June 2018. (if you have more than one of these superannuation income streams, then work out the number of days using the income stream which you started the earliest.)

     

    d

    From a, b and c work out which has the greatest number of days and write at d.

     

    Worksheet 3B

    Row

    Calculation

    Amount

    e

    Divide the number of days calculated at d by 365 and multiply by 100.

     

    f

    Multiply e by 1,000. Round up to the nearest dollar.

    This is your reduced defined benefit income cap.

    If you completed c and you also have a capped defined benefit income stream that is not a reversionary income stream, go to worksheet 4 at step 3 (do not complete the rest of worksheet 3). Otherwise, read on.

    $

    g

    Add the tax free component plus the taxed element from all your capped defined benefit income streams, including lump sums in arrears. Only include the amounts received after you were 60 years old or older, and the amounts, if any, you received from a reversionary income stream as defined above.

    $

    h

    Subtract g from f.

    If g is less than f write 0 at h and i.

    $

    i

    Divide h by 2.

    This is your Assessable amount from your capped defined benefit income stream.

    $

    Write the total from i at M item 7.

    Step 2

    Add any taxed element you received when you were 59 years or younger from your capped defined benefit income stream at J item 7.

    Add any lump sum in arrears taxed element amounts you received when you were 59 years or younger to Y item 7.

    Add up all your untaxed elements and write the total at N item 7.

    Add up the lump sum in arrears untaxed element to the total at Z item 7.

    Do not continue to step 3. You have now finished this question. Where to go next.

    Step 3

    Note: Only complete worksheet 4 if you completed c in worksheet 3A and you also have a capped defined benefit income stream that is not a reversionary income stream.

    Worksheet 4

    Row

    Calculation

    Amount

    a

    Write the amount from f in worksheet 3B.

    $

    b

    Add the tax free component plus the taxed element plus untaxed element from all your other capped defined benefit income streams that you received when you were 59 years or younger and which are not reversionary income streams, including lump sum in arrears.

    $

    c

    Work out the number of days in 2017–18 you received your other capped defined benefit income streams when you were 59 years or younger and which are not reversionary income streams.

     

    d

    Work out the number of days in 2017–18 you received your other capped defined benefit income stream when you were 59 years or younger and which are not reversionary income streams during the same time you receive your reversionary income stream.

     

    e

    If c is equal to d, write 100 % at e.

    If c is greater than d, divide d by c and multiply by 100.

    %

    f

    Multiply b by e.

    $

    g

    Subtract f from a. Round up to the nearest dollar. Where this is zero or less than zero, write 0.

    This is your reduced defined benefit income cap.

    $

    h

    Add the tax free component plus the taxed element from your reversionary income streams, including lump sum in arrears.

    $

    i

    If h is less than g write 0 at i and j.

    If h is more than g, subtract g from h.

    $

    j

    Divide i by 2.

    This is your Assessable amount from your capped defined benefit income stream.

    $

    Write the total from j at M item 7.

    Step 4

    Add any taxed element when you were 59 years or younger from your capped defined benefit income stream at J item 7.

    Add any lump sum in arrears taxed element amounts when you were 59 years or younger to Y item 7.

    Add up all your untaxed elements and write the total at N item 7.

    Add any lump sum in arrears untaxed element to the total at Z item 7.

    Tax tips

    You may be entitled to the:

    See also:

    Where to go next

      Last modified: 31 May 2018QC 54214