Document ID: chunk:federal_register_of_legislation:F2024L00664:schedule:13:p7
Version: federal_register_of_legislation:F2024L00664
Segment Type: schedule
Provision Reference: sch 13 (pt 7/23)
Character Range: 259406–262207

out whether withholding applies, and if so, what amount it applies to.
Income stream components                                                                                Does withholding apply?
Sum of the annualised tax-free component and taxed element is less than the defined benefit income cap  No withholding applies. No further steps are necessary.
Sum of annualised tax-free component and taxed element is greater than the defined benefit income cap   Withholding applies to 50% of the amount over the cap. Go to step 2.

Step 2: Calculate the weekly, fortnightly or monthly equivalent of the amount from step 1 in excess of the cap. For example, if you pay the payee weekly, divide the excess by 52. If you pay fortnightly, divide the excess by 26. If you pay monthly, divide the excess by 12 (ignore cents in the result).

Step 3: Divide the amount calculated at step 2 by two (ignore cents in the result).

Step 4: Use the appropriate PAYG withholding tax table at ato.gov.au/taxtables to calculate the withholding amount relevant to the amount worked out in step 3. The tax table you use depends on the period the income stream covers – that is, weekly, fortnightly or monthly.

These examples use the PAYG withholding tax tables that apply from 1 July 2024.
Example: Case B (i) - Capped defined benefit income stream where the annual entitlement is under the cap

Courtney, 61, receives a fortnightly capped defined benefit income stream of $2,000 comprising:

    * a tax-free component of $200
    * a taxable component – taxed element of $1,800.

Courtney is entitled to the full defined benefit income cap amount of $118,750 as there are no factors present that reduce this cap. The annual equivalent of Courtney's fortnightly super income stream ($52,000) is less than the defined benefit income cap of $118,750. As Courtney is over 60 years of age and her capped defined benefit income stream is comprised wholly of a taxed element and tax-free component of less than $118,750 for the financial year, no withholding is required.

Example: Case B (ii) - Capped defined benefit income stream where the annual entitlement exceeds the cap

Bill, 63, receives a fortnightly capped defined benefit income stream of $6,550 comprising:

    * a tax-free component of $750
    * a taxable component – taxed element of $5,800.

Bill is entitled to the full defined benefit income cap amount of $118,750 as there are no factors present that reduce this cap.

Step 1: The annual equivalent of Bill's fortnightly capped defined benefit income stream is made up of an annualised tax-free component of $19,500 and annualised taxed element of $150,800 totalling $170,300, which is greater than the defined benefit income cap of $118,750. Withholding applies to 50% of the amount over the cap.