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 super 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 payee is receiving a disability super income stream
- whether the super income stream includes an untaxed element (generally payments from state and Commonwealth public sector super schemes)
- the type of super income stream
- 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 should be reduced
- whether the income stream is a super death benefit income stream.
This schedule is divided into five parts. The amount required to be withheld from a super income stream depends on the type of super income stream you pay:
- account-based super income stream – use part A
- capped defined benefit income stream and
- payee is under 60 years old at any time during the financial year, including
- payee turns 60 years old during the financial year or starts their super income stream part way through the year at age 60 or older – use part E for post 60 income stream payments.
- payee is 60 years old or over for the full financial year
- payee is under 60 years old, and is in receipt of a reversionary death benefit income stream and the deceased was 60 years old or older at the time of death – use part E
If the super 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 super income stream is assessable in Australia, you are required to withhold from the payment.
- The full list of Australian Tax TreatiesExternal Link, as maintained by Treasury
- What are tax treaties?
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.