Document ID: chunk:federal_register_of_legislation:F2024L00664:schedule:13:p16
Version: federal_register_of_legislation:F2024L00664
Segment Type: schedule
Provision Reference: sch 13 (pt 16/23)
Character Range: 280994–283649

Tax-free component $2,000 × 26 = $52,000

Step 2: Apply the percentage that Loraine was over 60 to the whole of the annualised income stream $156,000 × 80% = $124,800

Step 3: From step 2 in part D, add together the annualised tax-free component and taxed element that has been reduced by applying the percentage Loraine was over 60. $41,600 + $62,400 = $104,000

Step 4: Subtract Loraine's reduced cap of $95,000 from $104,000. Result is $9,000

Step 5: Divide the result in step 4 by the remaining fortnights $9,000 ÷ 20 = $450 (ignore cents)

Step 6: Divide the amount at step 5 by two. $450 ÷ 2 = $225. Add Loraine's fortnight untaxed element amount $1,000. This totals $1,225. Using the Fortnightly tax table at ato.gov.au/taxtables the withholding amount for $1,225 is $104.

As Loraine's annualised tax-free component and taxed element is above her cap (as per step 4 above) no tax offset is applicable.

Examples: Case E (iii): Starting an income stream during the financial year

Sarah is 65 years of age and she first starts her capped defined benefit income stream on 30 December 2024.

Sarah's reduced defined benefit income cap for the 2024-25 financial year is worked out as follows:

  Step 1: Number of days from Sarah's first income stream payment to 30 June 2025 = 183

  Step 2: Step 1 result expressed as a percentage of the year: 183 ÷ 365 = 50.137%

  Step 3: Multiply the general defined benefit cap by step 2 result: $118,750 × 50.137%

Sarah's reduced defined benefit income cap is $59,538 (rounded to the nearest dollar).

Sarah's income stream for the period between 30 December 2024 and 30 June 2025 comprises:

    * taxable component – taxed element: $49,400
    * taxable component – untaxed element: $19,500
    * tax-free component: $14,950

Sarah's total income stream payments from 30 December 2024 is $83,850.

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

As Sarah is paid fortnightly, you will need to work out the remaining fortnights that withholding applies in the financial year from when the income stream commenced to be paid: 183 days ÷ 14 days = 13

Work out the amount subject to withholding

Step 1: Add together all the components.

$49,400 + $19,500 + $14,950 = $83,850

As the sum is over the $59,538 reduced cap, proceed to step 2.

Step 2: Add together the tax-free component and taxed element. Subtract the $59,538 reduced cap from this amount.

Sum 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