PAYG withholding obligations

You must withhold tax from benefit payments to members who are:

• under 60 years old
• under 60 years old and receives a reversionary capped defined benefit income stream – if the deceased was 60 years or over when they died
• 60 years old or over – if the benefit is from a capped defined benefit income stream.

If you have to withhold tax, you need to:

• register for pay as you go (PAYG) withholding
• obtain a Tax file number declaration from the member    
  • if the recipient does not provide their TFN before the payment is made you must withhold tax at the top marginal rate (47% for residents or 45% for non-residents from 1 July 2017) from the taxable component
  • if the recipient is a foreign resident for tax purposes, you will need to check if there is a tax treatyExternal Link with their country of residence – the tax treaty will tell you if the benefit payment will be assessable income in Australia or the other country – if it is only assessable in the other country then no tax needs to be withheld
   
• pay withheld amounts to the ATO
• issue a PAYG payment summary to the member    
  • PAYG payment summary – superannuation lump sum
  • PAYG payment summary – superannuation income stream
   
• lodge a PAYG withholding payment summary statement with us, usually by 14 August.

Provide information to the recipient of the benefit

When you pay a super benefit that contains an assessable amount you must give a payment summary to the recipient covering the details of the payment, including:

• tax-free component
• taxable component
• tax offset (if applicable)
• tax withheld (if applicable).

For income streams you must provide a PAYG payment summary by 14 July following the end of the financial year in which the payment was made.

For lump sums you must provide a PAYG payment summary within 14 days of making the lump sum payment.

You should provide a separate payment summary if:

• they are receiving a superannuation income stream and the member is 59 years or younger
• they are receiving a capped defined benefit income stream and the member is 60 or over and is in receipt of a capped defined benefit income stream
• the member is 59 years or younger and is in receipt of a reversionary capped defined benefit income stream where the deceased was aged 60 or over at the time of death
• a super lump sum was paid to    
  • a non-dependant in the event of another person's death
  • the trustee of a deceased estate.
   

Payment summaries should be issued in the situations listed above even if no tax has been withheld.

A payment summary is not required where a lump sum is paid to a member because of a terminal medical condition.

See also:

• PAYG withholding
• Taxation of super benefits