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  • 7 Australian annuities and superannuation income streams 2019

    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 2019, or return to the main menu Individual tax return instructions 2019.

    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 need to complete based on the superannuation income stream you received. Where you received multiple superannuation income streams, you may be required to complete some or all of the parts; and add together amounts from different parts, before writing the total on your tax return:

    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
    • you received a taxed element paid to you as the result of the death of another person who was 60 years old or older, or
    • you received a tax-free component.

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

    • you received a capped defined benefit income stream (including you having a death benefit income stream where the deceased was under 60 years old)
    • you were under 60 years old on 30 June 2019.

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

    • you received a capped defined benefit income stream
    • you were 60 years old or older on 1 July 2018
    • you received your income stream for all of 2018–19.

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

    • you turned 60 years old during 2018–19
    • you were 60 years old or older on 1 July 2018 and you started an income stream for the first time during 2018–19
    • you were under 60 years old on 30 June 2019 and have a death benefit income stream where the deceased was 60 years old 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. If so, 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 2018–19 as a lump sum in arrears, where $600 of that lump sum is due for 2016–17 and $300 for 2017–18, write 2016–17 $600 and 2017–18 $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 were 60 years old or older when you received a superannuation income stream payment with an untaxed element (the untaxed element is shown on your PAYG payment summary - superannuation income stream), and
    • your superannuation income stream was not a capped defined benefit income stream (contact your fund if you don't know).

    To claim that additional tax offset, you need to provide the following 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 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 all your PAYG payment summary – superannuation income stream.

    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 all your PAYG payment summary – superannuation income stream 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 from c at N item 7.

    Step 3

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

    Write the total at Z item 7.

    Part C

    Your defined benefit income cap is $100,000 for 2018–19. The Defined benefit income cap tool can assist you to calculate 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).

    We will take these amounts 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. These amounts are to include 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.

    $

    The amount at d is your assessable amount from your capped defined benefit income stream.

    Write the amount from d at M item 7.

    Step 2

    Add up the untaxed elements that appear on all your PAYG payment summary – superannuation income stream under the heading Taxable component.

    Write the total at N item 7.

    Step 3

    Add up the untaxed elements that appear on all your PAYG payment summary – superannuation income stream under the heading Lump sum in arrears – taxable component.

    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 2018–19 may be reduced.

    Use worksheets 3A and 3B, and worksheet 4 if required, to work out 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 on 1 July 2018 and you started a capped defined benefit income stream for the first time during 2018–19 – complete a in worksheet 3A.
    • turned 60 years old during 2018–19 and you received a capped defined benefit income stream during 2018–19 – complete b in worksheet 3A.
    • were under 60 years old at any time during 2018–19, and you had a 'reversionary income stream' (a term we use for a capped defined benefit income stream which is a death benefit income stream where the deceased died aged 60 years old or older) – complete c in worksheet 3A.
    Step 1
    Worksheet 3A

    Row

    Calculation

    Days

    a

    Work out the number of days in 2018–19 from when you first started to receive a superannuation income stream to 30 June 2019.

    (If you have more than one of these superannuation income streams, work out the number of days using the income stream you started first.)

        days

    b

    Work out the number of days in 2018–19 from the later of:

    • your 60th birthday, or
    • when you first started to receive a capped defined benefit income stream

    to 30 June 2019.

         days

    c

    Work out the number of days in 2018–19 from when you first started to receive a reversionary income stream to 30 June 2019.

    (If you have more than one of these superannuation income streams, work out the number of days using the income stream you started first.)

         days

    d

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

         days

    Worksheet 3B

    Row

    Calculation

    Amount

    e

    Divide the number of days you calculated at d in worksheet 3A by 365 and multiply by 100.

         days

    f

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

    This is your reduced defined benefit income cap.

    If you completed c in worksheet 3A 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 3B). Otherwise, read on.

    $

    g

    Add the tax-free component plus the taxed element from all your capped defined benefit income streams. These amounts are to include 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 f from g.

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

    $

    i

    Divide h by 2.

    $

    The amount at i is your assessable amount from your capped defined benefit income stream.

    Write the amount from i at M item 7.

    Step 2

    Add taxed elements you received when you were under 60 years old from your capped defined benefit income stream, and write the total at J item 7.

    Add lump sum in arrears taxed element amounts you received when you were under 60 years old, and write the total at 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 elements, and write the total at Z item 7.

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

    Step 3

    Complete worksheet 4 only if:

    • you completed c in worksheet 3A
    • you have a capped defined benefit income stream which 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 the untaxed element from all your other capped defined benefit income streams which you received when you were under 60 years old and which were not reversionary income streams.

    These amounts are to include lump sum in arrears.

    $

    c

    Work out the number of days in 2018–19 you received your other capped defined benefit income streams when you were under 60 years old and which were not reversionary income streams.

         days

    d

    Work out the number of days in 2018–19 you received your other capped defined benefit income stream when you were under 60 years old and which were not reversionary income streams during the same time you were receiving your reversionary income stream.

         days

    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 the result is zero or less than zero, write 0 at g.

    The amount at g is your reduced defined benefit income cap.

    $

    h

    Add the tax-free component plus the taxed element from your reversionary income streams and your other capped defined benefit income streams that you received when you were 60 years old or older.

    These amounts are to include 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.

    $

    The amount at j is your assessable amount from your capped defined benefit income stream.

    Write the amount from j at M item 7.

    Step 4

    Add taxed elements you received when you were under 60 years old from your capped defined benefit income stream, and write the total at J item 7.

    Add lump sum in arrears taxed element amounts you received when you were under 60 years old, and write the total at 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 elements, and write the total at Z item 7.

    Tax tips

    You may be entitled to the:

    See also:

    Where to go next

      Last modified: 30 May 2019QC 57964