Document ID: chunk:federal_register_of_legislation:F2024L00664:schedule:13:p9
Version: federal_register_of_legislation:F2024L00664
Segment Type: schedule
Provision Reference: sch 13 (pt 9/23)
Character Range: 264363–267121

reduced to the weekly, fortnightly or monthly equivalent of the capped tax offset amount.

Step 4: Work out the amount to withhold by subtracting the tax offset per payment (step 3) from the withholding amount (step 1).

  Amount to withhold = withholding amount − tax offset

If the tax offset amount is greater than the withholding amount, the amount to withhold is nil.
Example: Case C - Capped defined benefit income stream comprised of a taxable component – untaxed element only

This example uses the PAYG withholding tax tables that apply from 1 July 2024.

Vera, 68, receives a weekly super income stream of $2,500 comprised only of a taxable component – untaxed element.

Step 1: Using the Weekly tax table at ato.gov.au/taxtables the withholding amount relevant to the taxable component – untaxed element for $2,500 is $624 (Vera has claimed the tax-free threshold).

Step 2: The annual equivalent of Vera's weekly super income stream untaxed element ($2,500 × 52 = $130,000) is greater than the defined benefit income cap of $118,750. Therefore, Vera's tax offset is capped at $11,875 for the financial year.

Step 3: As Vera is over 60 years of age she is eligible for a 10% tax offset of the untaxed element.

The weekly tax offset amount is capped at $11,875 ÷ 52 = $228 (ignore cents)

This weekly offset amount exceeds this cap ($13,000 ÷ 52 = $250). Therefore, the weekly tax offset is reduced to $228.

Step 4: Work out the amount to withhold by subtracting the tax offset per payment (step 3) from the withholding amount (step 1).

Amount to withhold = withholding amount − tax offset

Amount to withhold = $624 − $228

Amount to withhold = $396

Part D

Use this part where the payee is receiving a capped defined benefit income stream and:
    * is 60 years of age or over, and
    * their income stream is made up of one or more of:

-          tax-free component and/or taxable component – taxed element
-          taxable component – untaxed element.

Withholding steps

Work out the amount subject to withholding

Step 1: Convert all of the components of the whole income stream the payee received during this period to an annualised amount.

Then add together all the annualised components that make up the income stream. Use the table below to determine whether you go to step 2 or part C.
Income stream components  Sum of components  Next step
Tax-free                  Taxed element      Untaxed element
Yes                       Yes                Yes              Equal to or greater than the defined benefit income cap  Go to step 2
Yes                       Yes                Yes              Less than the defined benefit income cap                 Go to part C (untaxed component)

Step 2: Add the annualised tax-free