Table A: Withholding rates for super lump sums
Table A: Withholding rates for super lump sums
Type of payment and tax component
|
Age of person at the date the payment is received
|
Amount subject to PAYG withholding
|
Rate of withholding
|
Member benefit – taxed element of the taxable component
|
Under preservation age
|
Whole amount
|
22%
|
Preservation age to 59 years
|
Amount up to low rate cap
|
Nil
|
Amount above the low rate cap
|
17%
|
60 years and above
|
Whole amount
|
Nil
|
Member benefit – untaxed element of the taxable component
|
Under preservation age
|
Amount up to untaxed plan cap
|
32%
|
Amount above untaxed plan cap
|
47%
|
Preservation age to 59 years
|
Amount up to low rate cap
|
17%
|
Amount above the low rate cap up to the untaxed plan cap
|
32%
|
Amount above untaxed plan cap
|
47%
|
60 years and above
|
Amount up to untaxed plan cap
|
17%
|
Amount above untaxed plan cap
|
47%
|
Member benefit – total of preserved benefits is less than $200
|
Any age
|
Nil – amount is
non-assessable, non-exempt income
|
n/a
|
Member benefit – terminal medical condition payment
|
Any age
|
Nil – amount is
non-assessable, non-exempt income
|
n/a
|
Death benefit paid to a dependant – taxed and untaxed elements of the taxable component
|
Any age
|
Nil – amount is
non-assessable, non-exempt income
|
n/a
|
Death benefit paid to a non-dependant – taxed element of the taxable component
|
Any age
|
Whole amount
|
17%
|
Death benefit paid to a non-dependant – untaxed element of the taxable component
|
Any age
|
Whole amount
|
32%
|
Death benefit paid to the trustee of the deceased estate
|
Any age
|
None
|
Nil
|
Additional information
Low rate cap: For the 2020–21 income year, the low rate cap is $215,000 and is indexed annually. The low rate cap is:
- in relation to super lump sums paid to an individual who has reached their preservation age, the maximum amount of the taxable component that is allowed the lowest rate of tax
- a lifetime limit
- allocated to the taxed element first before allocating the remaining low rate cap to the untaxed element.
Untaxed plan cap: For the 2020–21 income year, the untaxed plan cap is $1,565,000 and is indexed annually. For the low rate cap or the untaxed plan cap in prior years, phone us on 13 10 20 or visit Super.
Lump sum less than $200: There is no withholding required from the whole amount if it is paid by a regulated super fund, complying ADF or RSA provider as a super lump sum and it is the payee’s entire benefit.
A terminal medical condition exists if:
- two registered medical practitioners have certified, jointly or separately, that the member suffers from an illness, or has incurred an injury, that is likely to result in the member's death within 24 months of the date of certification
- at least one of the registered medical practitioners is a specialist practicing in an area related to the member's illness or injury
- the certification period has not ended for each of the certificates.
The certification period is 24 months from the date of certification.
A death benefit dependant for taxation purposes includes:
- spouse of the deceased
- child of the deceased under 18 years old
- a person who had an interdependency relationship with the deceased
- a person who was a dependant of the deceased just before the latter died
- any individual who is paid a lump sum death benefit if the deceased died in the line of duty as a member of the defence force, a member of the Australian Federal Police or the police force of a state or territory, or a protective service officer (as defined in the Australian Federal Police Act 1979).
A spouse of the deceased includes another person (of any sex) who:
- was in a relationship with the deceased that was registered under a law of a prescribed state or territory
- lived with the deceased on a genuine domestic basis in a relationship as a couple, although not legally married.
A child of the deceased includes:
- an adopted child, stepchild or ex-nuptial child
- a child of the deceased's spouse
- a child of the deceased within the meaning defined in the Family Law Act 1975 (for example, somebody who is considered to be a child of a person under a state or territory court order giving effect to a surrogacy agreement).
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 close personal relationship between two people who live together but do not satisfy one or more of the requirements mentioned in the previous dot point due to either or both of them suffering from a physical, intellectual or psychiatric disability.
For further information on interdependency relationships and before accepting that a person is financially dependent, phone us on 13 10 20.
Last modified: 13 Oct 2020QC 63807