• Schedule 13 – Tax table for superannuation income streams

    For payments made on or after 1 July 2017

    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(a) of Schedule 1 to the TAA.

    Using this table

    You should use this table if you make a payment of a super income stream, including a:

    • capped defined benefit income stream
    • transition to retirement income stream
    • temporary or permanent disability income stream

    Super income streams

    A super income stream is a series of regular payments from a superannuation provider when the member has satisfied a condition of release. These regular payments can be paid weekly, fortnightly, monthly, quarterly or annually.

    The following payment is not a super income stream payment:

    • commutation of an income stream; this is a super lump sum.

    What's New - Defined Benefit Income Cap

    As part of the Super Reform measures that apply from 1 July 2017 the legislation introduced a cap on defined benefit income streams. The general defined benefit cap is $100,000 and is subject to indexation. The cap can also be reduced - see part E. Income above the cap will be subject to additional tax treatment.

    Super income streams that did not previously have a withholding obligation are now subject to withholding even if the withholding amount is nil. Changes also apply to the applicable tax offset.

    You will now need to consider whether withholding applies on all superannuation income stream payments regardless of the member's age and income level.

    Defined Benefit income streams are subject to additional income tax rules where the recipient is 60 years old or over, or death benefits which a dependant receives from a deceased person 60 years old or over.

    A PAYG payment summary - superannuation income stream is required to be issued to all members regardless of age and withholding amount. For members who are 60 years old or over you will no longer need to populate the Tax Offset field, however you will still need to take this into account when working out their withholding amount.

    See also:

    Components of a super income stream

    Before you can work out the withholding amount, you must calculate the components of the super income stream.

    A super income stream may have two components:

    • taxable component which can include either or both of an:
      • element taxed in the fund (taxed element)
      • element untaxed in the fund (untaxed element).
       
    • tax-free component

    Tax file number (TFN) declarations

    The answers your payees provide on their Tax file number declaration determine the amount you need to withhold from their payments. A Tax file number declaration applies to any payments made after you receive the declaration. If you receive an updated declaration from a payee, it will override the previous one.

    If a payee does not give you a valid Tax file number declaration within 14 days of starting a payer/payee relationship, you must complete a Tax file number declaration with all available details of the payee and send it to us.

    When a TFN has not been provided

    You must withhold 47% for residents and 45% for foreign residents from the taxable component (ignoring any cents), if a super income stream payment is made to your payee and all of the following apply:

    • they have not quoted their TFN
    • they have not claimed an exemption from quoting their TFN
    • they have not advised you that they have applied for a TFN or have made an enquiry with us.

    If a payee states at question 1 of the Tax file number declaration they have lodged a Tax file number – application or enquiry for individuals with us, they have 28 days to provide you with their TFN.

    If the payee has not given you their TFN within 28 days, you must withhold 47% from any payment you make to a resident payee and 45% from a foreign resident payee from the relevant element(s) of the taxable component of the super income stream payment (ignoring any cents) unless we tell you not to.

    Do not allow for any tax offsets or Medicare levy adjustments. Do not withhold any amount for:

    • Higher Education Loan Program (HELP) debts
    • Student Start-up Loan (SSL) debts (includes ABSTUDY SSL debts)
    • Trade Support Loan (TSL) debts
    • Financial Supplement debts.

    Working out the withholding amount

    Factors to consider when working out the withholding amount include:

    • whether the payee is an Australian resident or foreign resident for tax purposes
    • the age of the payee
    • the frequency of the income stream payments – for example, fortnightly, monthly
    • whether the payee is claiming the tax-free threshold
    • whether the payee is claiming the seniors and pensioners tax offset
    • whether the income stream includes an untaxed element (generally payments from state and Commonwealth public sector super schemes)
    • whether the total of the taxed elements and tax-free component is greater or less than the defined benefit income cap (the Cap)
    • whether the defined benefit income cap (the Cap) can be reduced (see part E)
    • whether the income stream is a reversionary death benefit income stream (see part E).

    The following diagram shows the combination of the income stream components and how they are taxed.

    Where a payee’s income stream consists of a tax-free component and taxable component - taxed and untaxed elements, and the yearly income does not exceed the Cap amount of $100,000, there is no change to how the income is taxed. Where a payee’s income stream consists of a tax-free component and a taxable component - taxed element, and the yearly income is greater than the Cap amount of $100,000, 50% of the income above the Cap is assessable. Where a payee’s income stream only consists of a taxable component - untaxed element, the payee’s entitlement to a tax offset is limited to $10,000. Where a payee’s income stream consists of a tax-free component and taxable component - taxed and untaxed elements, and the yearly income exceeds the Cap amount of $100,000, then there are two steps involved in determining the taxable income. Step 1 - Work out all the Components in the income stream that are assessable. Add the tax free component and taxable component - taxed element. If the sum is greater than the $100,000 Cap then 50% of the income above the Cap is assessable income together with the taxable component - untaxed element. If the sum is less than the $100,000 Cap then only the taxable component - untaxed element is assessable. Step 2 - Determine the Tax Offset. Add the tax free component and taxable component - taxed element. If the sum is greater than the $100,000 Cap then no tax offset applies. If the sum is less than the $100,000 Cap then the Tax Offset is limited to the sum of the tax free component and taxable component - taxed element, less the Cap, multiplied by 10%.

    Payments to Australian residents

    This schedule is divided into five parts. The amount required to be withheld from a super income stream can be calculated using the following parts:

    payee is under 60 years old, including disability super income streams and reversionary income streams where the deceased was aged less than 60 – use part A.

    • payee is under 60 years old, and is in receipt of a reversionary income stream and the deceased was at least 60 years old at the time of death – use part E.
    • payee turns 60 years old during the financial year or starts their income stream part way through the financial year – use part E.
    • payee is 60 years old or over and their capped defined benefit income stream payments are from a taxable component - taxed element and tax-free component only – use part B.
    • payee is 60 years old or over, and receives a taxable component - untaxed element only, or the total capped defined benefit income stream is less than the Cap and they have an untaxed element – use part C.
    • payee is 60 years old or over, and receives a mixture of the components as a capped defined benefit income stream – use part D.

    Payments to foreign residents

    If the income stream is to be made to a foreign resident, you will need to check if there is a tax treaty with their country of residence. If the super income stream is assessable in the other country because of the treaty, no withholding is required.

    If a foreign resident's income stream is assessable in Australia, you are required to withhold from the payment.

    See also:

    Rounding of withholding amounts

    Ignore any cents in an income stream before using any of the steps in this schedule to calculate withholding, Withholding amounts calculated using the steps are rounded to the nearest dollar. Results ending in exactly 50 cents are rounded to the next highest dollar. Do this rounding directly; do not make a preliminary rounding to the nearest cent. Where no TFN has been provided, cents are ignored when withholding amounts are calculated.

    Last modified: 14 Jun 2017QC 52079