Document ID: chunk:federal_register_of_legislation:F2024L00664:schedule:13:p6
Version: federal_register_of_legislation:F2024L00664
Segment Type: schedule
Provision Reference: sch 13 (pt 6/23)
Character Range: 256896–259743

not need to consider their tax-free component when calculating their withholding.
Example: Case A - Payee is under 60 years of age

This example uses the PAYG withholding tax tables that apply from 1 July 2024.

Veronica, 58, receives a fortnightly disability super income stream of $1,400 comprising:

    * a tax-free component of $300
    * a taxable component – taxed element of $1,100.

Veronica's preservation age is 60.

Step 1: Veronica is 58 years of age therefore withholding applies to the taxable component.

Step 2: As Veronica is paid fortnightly, use the Fortnightly tax table at ato.gov.au/taxtables to work out the withholding required from the $1,100 taxed element. This amount is $70, if Veronica is claiming the tax-free threshold.

Step 3: Since Veronica is below her preservation age and is receiving a disability super income stream, she is entitled to a tax offset.

Tax offset = taxed element × 15%

= $1,100 × 15%

= $165

Step 4: Calculate Veronica's fortnightly offset adjustment amount. As Veronica's fortnightly payment is more than $1,000 (the Medicare levy threshold for singles, on a fortnightly basis) but less than $1,250 (the Medicare levy SOP for singles, on a fortnightly basis), her offset adjustment amount is calculated as:

Offset adjustment amount = (Taxable component − Medicare levy threshold for singles) × 0.10

= ($1,100 − $1,000) × 0.10

= $10.00

= $10 per fortnight (round to the nearest dollar)

Veronica's offset adjustment amount is $10 per fortnight.

Step 5: To calculate the notional withholding amount, reduce the withholding amount ($70 as worked out in step 2) by the value of the tax offset ($165 as worked out in step 3). That is:

Notional withholding amount = $70 − $165 = −$95

Since the notional withholding amount is negative and less than the offset adjustment amount, the amount to be withheld from Veronica's fortnightly super income stream is $10. This is the offset adjustment amount which will cover the Medicare levy payable.

Part B

Use this part if the payee is receiving a capped defined benefit income stream during the year and is:
    * 60 years of age or over and
    * their super income stream is made up of:

-          tax-free component
-          taxable component – taxed element
-          tax-free component and the taxable component – taxed element.

Withholding steps

Step 1: Convert the super income stream components the payee received for the period to an annualised amount and use the following table to work 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