PAYG withholding obligations
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 (49% for residents or 47% for non-residents) 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 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
- 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 payment summary if:
- the member is under 60
- the member is 60 or over and the taxable component contained an untaxed element
- 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.
How to meet pay as you go (PAYG) withholding and reporting obligations when paying a super benefit to a member.