• Schedule 6 – Tax table for annuities

     

    Attention

    For payments made on or after 1 July 2014 to 30 June 2015.

    This document is a withholding schedule made by the Commissioner of Taxation in accordance with sections 15-25 and 15-30 of Schedule 1 to the Taxation Administration Act 1953 (TAA). It applies to withholding payments covered by paragraph 12-80 (b) of Schedule 1 to the TAA.

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    Using this table

    Attention

    Warning:

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

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    You should use this table if you pay an annuity that is not a super income stream. For super income stream payments, refer to Tax table for superannuation income streams (NAT 70982).

    We have a calculator to help work out the correct amount of tax to withhold from payments to most payees. To access the calculator, refer to Tax withheld calculator.

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    Working out the withholding amount

    To work out the withholding amount for an annuity payment that is not a super income stream, you must:

    1. Work out the amount of income to withhold from using the following formula:
      Annuity payment - [Deductible 27H amount / Number of instalments]

    In this formula:

    • deductible 27H amount is the deductible amount for the annuity calculated under section 27H of the Income Tax Assessment Act 1936.
    • number of instalments is the number of instalments of the annuity payable in the income year.

    Find out more

    If you do not know the deductible 27H amount, we will calculate it for you. To make this request, the annuity recipient needs to send the information set out in question D11 – Deductible amount of undeducted purchase price of a foreign pension or annuity 2015 to the following address:

    Australian Taxation Office
    PO Box 3578
    ALBURY NSW 2640

    For more information, refer to Individual tax return instructions supplement and read question D11.

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    1. Use the corresponding PAYG withholding tax table to find the withholding amount. The tax table you use depends on the period which the annuity is paid – for example, weekly or fortnightly.
    Attention

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

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    These examples use the PAYG withholding tax tables that apply from 1 July 2014.

    Example 1

    Barbara has an annuity that is not a super income stream that pays $1,000 a week. The ATO has informed Barbara that her deductible 27H amount for the 2014–15 income year is $5,200.

    1. The amount to withhold from is:
      Annuity payment - [Deductible 27H amount / Number of instalments]
      = $1,000 - [$5,200 / 52]
      = $1,000 - $100
      = $900
    2. Barbara’s payer will then use the Weekly tax table (NAT 1005) to work out how much to withhold from $900. Assuming Barbara is claiming the tax-free threshold, the amount to be withheld is $148.
    End of example

    Example 2

    Kenneth will receive a fortnightly annuity that is not a super income stream, paid on the 7th and 21st day of the month from 7 February 2015. For the remainder of the income year, the annuity will be $850 per fortnight. The annuity is indexed annually and the higher indexed amount is paid from 7 July 2015.

    Kenneth has written to the ATO requesting that his deductible 27H amount be calculated. The ATO has informed Kenneth that his deductible 27H amount for a whole income year is $2,400 and for the part of the current income year that he is to receive an annuity; his deductible amount is $1,000.

    For the current income year, Kenneth will receive ten annuity instalments.

    1. The amount to withhold from is:
      Annuity payment - [Deductible 27H amount / Number of instalments]= $850 - [$1,000 / 10]
      = $850 - $100
      = $750
    2. Kenneth’s payer will then use the Fortnightly tax table (NAT 1006) to work out how much to withhold from $750. Assuming Kenneth is claiming the tax-free threshold, the amount to be withheld is $8.
    End of example

    Rounding of withholding amounts

    Withholding amounts calculated using the above formulas should be rounded to the nearest dollar. Results ending in 50 cents are rounded to the next higher dollar. Do this rounding directly – that is, do not make a preliminary rounding to the nearest cent.

    Last modified: 01 Jul 2014QC 39429