Document ID: chunk:federal_register_of_legislation:F2024L00664:schedule:6:p1
Version: federal_register_of_legislation:F2024L00664
Segment Type: schedule
Provision Reference: sch 6 (pt 1/3)
Character Range: 153648–156480

Schedule 6 – Tax table for annuities

This schedule applies to withholding payments covered by paragraph 12-80(b) of Schedule 1 to the TAA.

The amounts, formulas and procedures in this schedule were last updated on 1 July 2024.

Using this schedule

Use this schedule if you pay an annuity that was purchased with non-superannuation money, for example, an initial capital investment of personal cash.

For annuities purchased using money rolled over from a super fund or super income stream payments, use Schedule 13 - Tax table for superannuation income streams.

Working out the withholding amount

To work out the withholding amount for an annuity payment purchased with non-superannuation money, you must:

   1. Work out the amount of income to withhold from using the following formula:

  Annuity payment − [Deductible amount / Number of instalments]

In this formula:
    * deductible amount represents the amount of the annuity payment that is exempt from tax. This amount is calculated using the formula found in section 27H of the Income Tax Assessment Act 1936.

    -          Where the annuity is held in only one person's name, the following formula is used:
    (Undeducted purchase price of the annuity − Residual capital value) / Term of annuity or life expectation factor

    The undeducted purchase price is generally the amount of the initial capital investment.

    -          Where the annuity is held or payable to 2 or more people, the deductible amount is apportioned depending on the amount each person received.

    * number of instalments is the number of instalments of the annuity payable in the income year.

The recipient of the annuity may request the ATO to calculate the deductible amount of their annuity using Request for determination of the deductible amount of UPP of an Australian pension or annuity.

   2.        Use the corresponding PAYG withholding tax table at ato.gov.au/taxtables to find the withholding amount. The tax table you use depends on the period which the annuity is paid – for example, weekly or fortnightly.

Some payees may be eligible to claim the seniors and pensioners tax offset (SAPTO). If your payee gives you a Withholding declaration indicating that they want to claim a SAPTO entitlement through PAYG withholding, use the Schedule 9 - Tax table for seniors and pensioners to work out the amount to withhold from the income amount calculated in step 1.

Rounding of withholding amounts

Withholding amounts calculated using the above formulas should be rounded to the nearest dollar. Results ending in 50 cents are rounded to the next higher dollar. Do this rounding directly – that is, do not make a preliminary rounding to the nearest cent.

Examples

These examples use the PAYG withholding tax tables at ato.gov.au/taxtables that apply from 1 July