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  • Tax time message for recipients of defined benefit income streams

    If your members receive income from one or more capped defined benefit income streams, they may have additional tax liabilities and they may need to calculate their entitlement to the 10% tax offset. This applies if the income from all of their capped defined benefit income streams exceeds their defined benefit income cap.

    Your members will have a defined benefit income cap if they have income from a defined benefit income stream and are:

    • 60 years of age or older
    • under 60 years of age and in receipt of a death benefit income stream from a person who died aged 60 or over.

    For most individuals, the defined benefit income cap will be $100,000. It may be less in some circumstances, including if they turned 60 during the year or were over 60 and started receiving income from a capped defined benefit income stream for the first time partway through the year.

    When preparing their tax return they'll need to:

    • include at label 7M half of the income from the tax-free component and taxed elements of capped defined benefit income streams which is in excess of their defined benefit cap
    • include any untaxed element at label 7N
    • calculate their tax offset and include this amount at label T2. This amount may be nil.

    To help them get it right, they can use our defined benefit income cap tool to calculate:

    • their defined benefit income cap
    • any income which needs to be included in their assessable income and reported at label 7M or 7N
    • their entitlement to the tax offset.

    See also:

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      Last modified: 09 Jul 2019QC 59595