Document ID: chunk:federal_register_of_legislation:F2024L00664:schedule:13:p11
Version: federal_register_of_legislation:F2024L00664
Segment Type: schedule
Provision Reference: sch 13 (pt 11/23)
Character Range: 269214–271899

a capped defined benefit income stream

Nancy, 75, receives a capped defined benefit income stream for the financial year of $212,000 comprising of the annualised:

    * taxable component – taxed element $120,000
    * taxable component – untaxed element $62,000
    * tax-free component $30,000.

Nancy is paid weekly and claims the tax-free threshold.

Work out the amount subject to withholding

Step 1: Add together all the annualised components.

$120,000 + $62,000 + $30,000 = $212,000

As the sum is over the $118,750 cap, proceed to step 2.

Step 2: Add together the tax-free component and taxed element. Subtract the $118,750 cap from this amount.

Sum of tax-free component and taxed element

$120,000 + $30,000 = $150,000

Amount in excess of cap

$150,000 − $118,750 = $31,250

Step 3: Calculate the weekly equivalent of the amount in excess of $118,750 calculated at step 2.

$31,250 ÷ 52 = $600 (ignore any cents)

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

$600÷ 2 = $300 (ignore any cents)

Step 5: Calculate the weekly equivalent of the untaxed element of the taxable component $1,192 ($62,000 ÷ 52) and add it to the amount calculated at step 4 ($300).

$1,192 + $300 = $1,492

Step 6: Using the Weekly tax table at ato.gov.au/taxtables the withholding amount relevant to the amount calculated in step 5 is $301.

Calculate the tax offset applicable

Step 7: Determine any entitlement to the tax offset. As the sum of Nancy's taxed element and tax-free component is over $118,750, she is no longer eligible for a tax offset for the untaxed element.

Work out the amount to withhold

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

= $301 − 0

Total amount to withhold is $301.

Example: Case D (ii) - Payee is over 60 years of age and receives all elements of a capped defined benefit income stream

Fred, 68, receives a capped defined benefit income stream (annualised) for the full financial year of $135,000 comprising:

    * taxable component – taxed element $92,000
    * taxable component – untaxed element $33,000
    * tax-free component $10,000.

Fred is paid fortnightly and claims the tax-free threshold.

Work out the amount subject to withholding

Step 1: Add together all the components.

$92,000 + $33,000 + $10,000 = $135,000

As the sum is over the $118,750 cap, proceed to step 2.

Step 2: Add together the tax-free component and taxed element. Subtract the $118,750 cap from the result.

Sum of tax-free component and taxed element.

$10,000 + $92,000 = $102,000

Amount in excess of cap.

$102,000 − $118,750 = −$16,750

As $102,000 is less than $118,750 there is no excess amount.

Step 3 and Step