• Part C: Payment is a super death benefit income stream

    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.

    Super death benefit paid to a dependant1
    Age of deceased Age of recipient Taxable component of super death benefit income stream contains Withholding applies to the following amount(s)
    Untaxed element Taxed element

    Below 60 years of age

    Below 60 years of age

    Yes

    Yes

    Sum of untaxed and taxed elements

    Yes

    No

    Untaxed element

    No

    Yes

    Taxed element

    60 years of age and over

    Yes

    Yes

    Untaxed element

    Yes

    No

    Untaxed element

    No

    Yes

    No withholding

    Aged 60 years of age and over

     

    Yes

    Yes

    Untaxed element

    Yes

    No

    Untaxed element

    No

    Yes

    No withholding

    1 Dependents include all children of the deceased under the age of 18, any spouse of the deceased (including a former spouse and a current or former de facto spouse) and any person with whom the deceased had an interdependency relationship. An interdependency relationship includes a close personal relationship between two people who live together, where one or both provides for the financial and domestic support and personal care of the other. A dependant can also be a person who was financially dependent on the deceased. Before accepting that a person is financially dependent, phone us on 13 10 20.

    Step 2 Use the appropriate PAYG withholding tax table to calculate the withholding amount relevant to the amount worked out in 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 SAPTO. If the payee gives you a Withholding declaration indicating they want to claim a SAPTO entitlement through PAYG withholding, you should use the 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 Some super income streams may be eligible for a section 302–75 or 302–85 tax offset. Use the following table to work out the tax offset amount for the payee.

    Super death benefits paid to a dependant
    Age of deceased Age of recipient Tax offset (section 301-25)

    Below 60 years of age

    Below 60 years of age

    Taxed element x 15%

    60 years of age and over

    Untaxed element × 10%

    60 years of age and over

    Any age

    Untaxed element x 10%

    Step 4 Work out the amount to withhold by subtracting the tax offset per payment (step 3) from the withholding amount (step 2).

    Amount to withhold = withholding amount – tax offset

    If the tax offset amount is greater than the withholding amount, the amount to withhold is nil.

    Super death benefits paid to a non-dependant

    From 1 July 2007, a person who is not a dependant of the deceased is not able to receive a super income stream. A super death benefit income stream that was being paid to a non-dependant prior to 1 July 2007 is taxed in the same manner as a super death benefit income stream paid to a dependant.

    Last modified: 10 Nov 2015QC 25956