Document ID: chunk:federal_register_of_legislation:F2024L00664:schedule:13:p17
Version: federal_register_of_legislation:F2024L00664
Segment Type: schedule
Provision Reference: sch 13 (pt 17/23)
Character Range: 283416–285984

the tax-free component and taxed element

$49,400 + $14,950 = $64,350

Amount in excess of cap

$64,350 − $59,538 = $4,812

Step 3: Calculate the fortnightly equivalent of the amount in excess of $59,538 calculated at step 2 by using the number of remaining fortnights in the financial year from when the income stream commenced.

$4,812 ÷ 13 = $370 (ignore cents)

Step 4: Divide the amount calculated at step 3 by two.

$370 ÷ 2 = $185 (ignore cents)

Step 5: Calculate the fortnightly equivalent of the untaxed element of the taxable component using the remaining fortnights in the financial year from when the income stream started and add it to the amount calculated at step 4.

($19,500 ÷ 13) = $1,500

$1,500 + $185 = $1,685

Step 6: Using the Fortnightly tax table at ato.gov.au/taxtables the withholding amount relevant to the amount calculated in step 5 is $190.

Calculate the tax offset applicable

Step 7: Determine any entitlement to the tax offset. As the sum of Sarah's taxed element and tax-free component is over $59,538, she is no longer eligible for a tax offset for the untaxed element.

If Sarah were eligible, you would apply the following:

    * If the sum of the tax-free component and taxed element is less than the reduced cap, the payee is entitled to a reduced tax offset. Subtract from the reduced cap the sum of the tax-free component and the taxed element from step 2 and apply 10% to this amount. The result is the tax offset amount the payee is entitled to for the financial year.

    * Calculate the weekly, fortnightly or monthly equivalent of this tax offset amount for the remaining weeks, fortnights or months that withholding applies in the financial year from when the income stream commenced to be paid. For example, if the income stream started on 30 December 2024 and you pay the payee weekly divide the amount by 26. If you pay fortnightly, divide the amount by 13. If you pay monthly, divide the amount by 6 (ignore cents in the result).

Work out the amount to withhold

Step 8: Amount to withhold = withholding amount (step 6) − tax offset (step 7)

= $190 − 0

Total amount to withhold is $190.

Case E (iv): Starting an income stream during the financial year – income stream does not include all components

If Sarah only had a tax-free component and/or a taxable component - taxed element or an untaxed element, then you will need to go to part B or part C respectively to work out the withholding after determining the reduced defined benefit income cap. However, the following changes to certain steps in each of