• Examples

    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

    These examples use the PAYG withholding tax tables that apply from 1 July 2012.

    Example

    Case A: Taxable component comprised wholly of an element taxed in the fund

    Example 1

    Courtney is age 61 and is receiving fortnightly super income stream benefits of $1,000.

    The tax-free component of Courtney’s fortnightly super income stream benefits is $200.

    The taxable component of the super income stream benefit is $800

    Step 1: As Courtney is 61 and his taxable component is comprised wholly of a taxed element, no withholding is required.

    End of example

    Example 2

    Maree is 56 years old and is receiving fortnightly super income stream benefits of $1,200. Maree’s preservation age is 55 years.

    The tax-free component of Maree’s fortnightly super income stream benefit is $300. The taxable component of Maree’s super income stream benefit is $900.

    Step 1: As Maree is 56, withholding applies to the taxable component.

    Step 2: As Maree is paid fortnightly, use Fortnightly tax table (NAT 1006) to work out the withholding required from the $900 taxed element. This is $48 assuming that Maree is claiming the tax-free threshold.

    Step 3: Calculate Maree’s fortnightly Medicare levy adjustment. As Maree’s fortnightly payment is more than $790 (the Medicare levy threshold for singles, on a fortnightly basis) but less than $928 (the Medicare levy SOP for singles, on a fortnightly basis), her Medicare levy adjustment is calculated as:

    Medicare levy adjustment = ($900 – $790) x 0.10

    = $11

    = $11 per fortnight (rounded to the nearest dollar)

    Therefore, Maree’s Medicare levy adjustment is $11 per month.

    Step 4: Maree is entitled to a section 301–25 tax offset.

    Tax offset = taxed element x 15%

    = $900 x 15%

    = $135

    Step 5: To calculate the notional withholding amount, reduce the withholding amount ($48 as worked out in step 2) by the value of the tax offset ($135 as worked out in step 4). That is:

    Notional withholding amount = $48 – $135

    = -$87

    Since the notional withholding amount is negative and less than the Medicare levy adjustment, the amount to be withheld from Maree’s fortnightly super income stream benefit is $11. This is the Medicare levy adjustment amount.

    End of example

    Case B: Taxable component comprises an element taxed in the fund and an element untaxed in the fund

    Ralph is 63 years old and receives fortnightly super income stream benefits of $3,000.

    The tax-free component of Ralph’s fortnightly super income stream benefit is $900. The taxable component of his super income stream benefit is $2,100.

    Step 1: Ralph’s $2,100 taxable component is comprised of a $600 taxed element and a $1,500 untaxed element. As Ralph is 63, no withholding will apply to the taxed element. Withholding will apply to the $1,500 untaxed element.

    Step 2: Using the Fortnightly tax table (NAT 1006), work out the withholding required from the $1,500 untaxed element. This is $184, assuming that Ralph is claiming the tax-free threshold.

    Step 3: Ralph is entitled to a section 301–100 tax offset.

    Tax offset = untaxed element x 10%

    = $1,500 x 10%

    = $150

    Step 4: Reduce the withholding amount ($184 as worked out in step 2) by the value of the tax offset ($150).

    Final withholding amount = withholding amount less tax offset

    = $184 – $150

    = $34

    End of example

    Case C: Super death benefit income stream where the taxable component comprises an element taxed in the fund and an element untaxed in the fund

    Harriet is 58 years old and her husband, aged 58, dies on 10 July 2012. As a result of her husband’s death, Harriet receives a fortnightly super income stream benefit of $2,000.

    The tax-free component of Harriet’s super death benefit income stream payments is $400. The taxable component of Harriet’s super death benefit income stream is $1,600.

    Step 1: Harriet’s $1,600 taxable component is comprised of a $600 taxed element and a $1,000 untaxed element. As Harriet is 58 and her husband was also under 60 years of age, withholding will apply to the full taxable component.

    Step 2: Using the Fortnightly tax table (NAT 1006), work out the withholding required from the $1,600 taxable component. This is $218, assuming that Harriet is claiming the tax-free threshold.

    Step 3: Harriet is entitled to a section 302–75 tax offset.

    Tax offset = taxed element x 15%

    = $600 x 15%

    = $90

    Step 4: Reduce the withholding amount ($218 as worked out in step 2) by the value of the tax offset ($90).

    Final withholding amount = withholding amount less tax offset

    = $218 – $90

    = $128

    End of example
    Last modified: 10 Nov 2015QC 25956