• Part A: Taxable component is comprised wholly of an element taxed in the fund

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Step 1 Use the following table to work out which elements of the taxable component are subject to withholding.

    Age Withholding applies to the following amount(s)

    Below age 60

    Taxable component

    Aged 60 and over

    No withholding

    If your payee is aged 60 years of age or over, no withholding is required.

    If your payee is less than age 60 years of age, go to step 2.

    Step 2 Use the appropriate PAYG withholding tax table to calculate the withholding amount relevant to the amount worked out at step 1. The tax table you use depends on the period for which the income stream covers – that is, weekly, fortnightly or monthly.

    Attention

    Some payees may be eligible to claim the seniors and pensioners tax offset (SAPTO). If the payee gives you a Withholding declaration (NAT 3093) indicating that they want to claim a SAPTO entitlement through PAYG withholding, you should refer to Tax table for seniors and pensioners (NAT 4466) to work out the amount to withhold from the amount calculated in step 1.

    End of attention

    Step 3 Use the appropriate formula to calculate the Medicare levy adjustment:

    • If your payee’s taxable component (on a weekly basis) is less than the Medicare levy threshold for singles, their Medicare levy adjustment is nil.
    • If your payee’s taxable component (on a weekly basis) is greater than the Medicare levy threshold for singles, but less than the Medicare levy shade out point (SOP ) for singles, their Medicare levy adjustment = (taxable component – Medicare levy threshold for singles) x 0.10.
    • If your payee’s taxable component (on a weekly basis) is greater than or equal to the Medicare levy SOP for singles, but less than $934, their Medicare levy adjustment = taxable component x 0.015.
    • If your payee’s taxable component (on a weekly basis) is greater than $933, their Medicare levy adjustment is nil.

    Fortnightly, monthly and quarterly equivalents for step 3

    If you make a fortnightly, monthly or quarterly payment, use the instructions contained in Statement of formulas for calculating amounts to be withheld (NAT 1004) to calculate the appropriate amounts for the thresholds and formulas in step 3.

    Step 4 Some super income streams may be eligible for a section 301–25 or 301–40 tax offset. Use the following table to calculate the tax offset amount for your payee.

    Super income stream – taxable component

    Age Tax offset (section 301-25)

    Below preservation age

    Nil

    Preservation age to below 60 years of age

    Taxed element × 15%

    Disability super income stream – taxable component

    Age Tax offset

    Below preservation age

    Taxed element × 15%

    Preservation age to below 60 years of age

    Taxed element × 15%

    Step 5 Calculate the notional amount to withhold by first subtracting the tax offset per payment (step 4) from the withholding amount (step 2).

    Notional amount to withhold = withholding amount – tax offset

    Then compare the notional amount to withhold with the Medicare levy adjustment calculated at step 3.

    If the notional amount to withhold is:

    • less than the amount calculated at step 3, withhold the amount calculated at step 3.
    • more than the amount calculated at step 3, withhold the notional amount to be withheld.
    Last modified: 10 Nov 2015QC 25956