This question is about income you received from annuities and superannuation income streams.
Australian annuities (also called non-superannuation annuities) are paid to you by Australian life insurance companies and friendly societies. These payments are shown on your PAYG payment summary – individual non-business.
Australian superannuation income streams (including lump sum in arrears amounts) are paid to you by Australian superannuation funds, retirement savings account (RSA) providers and or life insurance companies. These payments are shown on your PAYG payment summary – superannuation income stream and may include:
- account based income streams
- capped defined benefit income streams that are
- lifetime pensions, regardless of when they started
- lifetime annuities that existed prior to 1 July 2017
- life expectancy pensions and annuities that existed prior to 1 July 2017
- market-linked pensions and annuities that existed prior to 1 July 2017.
If you received a taxable Australian superannuation lump sum payment, do not show it here; show it at question 8.
Did you receive Australian annuities or superannuation income streams?
No |
Go to question 8 Australian superannuation lump sum payments 2021, or return to the main menu Individual tax return instructions 2021. |
Yes |
Use the Defined benefit income cap tool to answer this question or read on. |
Answering this question
This question is divided into four parts. The amount to be included in your income tax return is dependent on the type of superannuation income stream you receive.
The following outlines the parts that you need to complete based on the superannuation income stream you received. Where you received multiple superannuation income streams, you may be required to complete some or all of the parts; and add together amounts from different parts, before writing the total on your tax return:
Complete parts A and B if you received:
- a superannuation income stream (including death benefit income streams) – for example an account based pension and not a capped defined benefit income stream that is covered below
- an Australian annuity.
Do not show the following tax-free amounts (unless instructed otherwise) where you are receiving a superannuation income stream (including death benefit income streams) and:
- you received a taxed element after your 60th birthday
- you received a taxed element paid to you as the result of the death of another person who was 60 years old or older, or
- you received a tax-free component.
Complete parts A and B if all of the following apply:
- you received a capped defined benefit income stream (including you having a death benefit income stream where the deceased was under 60 years old)
- you were under 60 years old on 30 June 2021.
Complete parts A and C if all of the following apply:
- you received a capped defined benefit income stream
- you were 60 years old or older on 1 July 2020
- you received your income stream for all of 2020–21.
Complete parts A and D if you received a capped defined benefit income stream, and any of the following apply:
- you turned 60 years old during 2020–21
- you were 60 years old or older on 1 July 2020 and you started an income stream for the first time during 2020–21
- you were under 60 years old on 30 June 2021 and have a death benefit income stream where the deceased was 60 years old or older. This will be indicated on your payment summary as Death benefit (Reversionary income stream).
Additional requirements
You may be entitled to a tax offset if you received a superannuation income stream lump sum in arrears. If so, you need to provide additional information.
- On a separate sheet of paper
- print Schedule of additional information – Item 7
- print your name, address and tax file number
- write the amount of the payment in arrears for each income year involved.
For example, if you received $900 in 2020–21 as a lump sum in arrears, where $600 of that lump sum is due for 2018–19 and $300 for 2019–20, write 2018–19 $600 and 2019–20 $300. If you do not have that information, contact the payer of your superannuation income stream.
- Attach your schedule of additional information to page 3 of your tax return.
- Print X in the Yes box at Taxpayer's declaration question 2 on page 10 of your tax return.
You may be entitled to an additional tax offset if:
- you were 60 years old or older when you received a superannuation income stream payment with an untaxed element (the untaxed element is shown on your PAYG payment summary – superannuation income stream), and
- your superannuation income stream was not a capped defined benefit income stream (contact your fund if you don't know).
To claim that additional tax offset, you need to provide the following additional information:
- On a separate sheet of paper
- print Schedule of additional information – Item 7
- print your name, address and tax file number
- write the superannuation income stream provider name and the untaxed element amount.
- Attach your schedule of additional information to page 3 of your tax return.
- Print X in the Yes box at Taxpayer's declaration question 2 on page 10 of your tax return.
Completing your tax return
You will need:
- for annuities
- all your PAYG payment summary – individual non-business which show the amount of your annuity and its undeducted purchase price (UPP)
- for superannuation income streams
- all your PAYG payment summary – superannuation income stream.
Part A
Add up the tax withheld amounts on your payment summaries.
Write the total in the left hand column under Tax withheld at item 7.
Part B
Step 1
Add up the taxed element amounts that appear on all your PAYG payment summary – superannuation income stream under the heading Taxable component.
Write the total at J item 7.
Step 2
Row |
Calculation |
Amount |
|---|---|---|
a |
Add the total of your untaxed elements. |
$ |
b |
Write 0 if you did not receive any Australian annuities or if you did receive Australian annuities, take the deductible amount of the annuity’s UPP away from the gross amount shown on the payment summary. Write 0 if the result is negative. |
$ |
c |
Add a and b. |
$ |
Write the amount from c at N item 7.
Step 3
Add up the taxed element amounts that appear on all your PAYG payment summary – superannuation income stream under the heading Lump sum in arrears – taxable component.
Write the total at Y item 7.
Step 4
Add up the untaxed element amounts that appear on all your PAYG payment summary – superannuation income stream under the heading Lump sum in arrears – taxable component.
Write the total at Z item 7.
Part C
Your defined benefit income cap is $100,000 for 2020–21. The Defined benefit income cap tool can assist you to calculate your assessable income from a capped defined benefit income stream.
Do not show amounts at:
- J item 7 (taxed element)
- Y item 7 (lump sum in arrears taxed element).
We will take these amounts into consideration when calculating your assessable amount from a capped defined benefit income stream.
Step 1
Row |
Calculation |
Amount |
|---|---|---|
a |
Add the tax-free component plus the taxed element from all your income streams. These amounts are to include lump sum in arrears. |
$ |
b |
Your defined benefit income cap |
$100,000 |
c |
Subtract b from a. If the result is less than or equal to $1, write 0 at c and d. |
$ |
d |
Divide c by 2. |
$ |
The amount at d is your assessable amount from your capped defined benefit income stream.
Write the amount from d at M item 7.
Step 2
Add up the untaxed elements that appear on all your PAYG payment summary – superannuation income stream under the heading Taxable component.
Write the total at N item 7.
Step 3
Add up the untaxed elements that appear on all your PAYG payment summary – superannuation income stream under the heading Lump sum in arrears – taxable component.
Write the total at Z item 7.
Part D – Reduction of your defined benefit income cap
Your defined benefit income cap of $100,000 for 2020–21 may be reduced.
Use worksheets 3A and 3B, and worksheet 4 if required, to work out the amount of assessable income to be included at M item 7, based on your defined benefit income cap.
If you:
- were 60 years old or older on 1 July 2020 and you started a capped defined benefit income stream for the first time during 2020–21 – complete a in worksheet 3A.
- turned 60 years old during 2020–21 and you received a capped defined benefit income stream during 2020–21 – complete b in worksheet 3A.
- were under 60 years old at any time during 2020–21, and you had a 'reversionary income stream' (a term we use for a capped defined benefit income stream which is a death benefit income stream where the deceased died aged 60 years old or older) – complete c in worksheet 3A.
Step 1
Row |
Calculation |
Days |
|---|---|---|
a |
Work out the number of days in 2020–21 from when you first started to receive a superannuation income stream to 30 June 2021. (If you have more than one of these superannuation income streams, work out the number of days using the income stream you started first.) |
days |
b |
Work out the number of days in 2020–21 from the later of:
to 30 June 2021. |
days |
c |
Work out the number of days in 2020–21 from when you first started to receive a reversionary income stream to 30 June 2021. (If you have more than one of these superannuation income streams, work out the number of days using the income stream you started first.) |
days |
d |
From a, b and c work out which has the greatest number of days and write at d. |
days |
Row |
Calculation |
Amount |
|---|---|---|
e |
Divide the number of days you calculated at d in worksheet 3A by 365 and multiply by 100. |
days |
f |
Multiply e by $1,000. Round up to the nearest dollar. This is your reduced defined benefit income cap. If you completed c in worksheet 3A and you also have a capped defined benefit income stream that is not a reversionary income stream, go to worksheet 4 at step 3 (do not complete the rest of worksheet 3B). Otherwise, read on. |
$ |
g |
Add the tax-free component plus the taxed element from all your capped defined benefit income streams. These amounts are to include lump sums in arrears. Only include the amounts received after you were 60 years old or older, and the amounts, if any, you received from a reversionary income stream as defined above. |
$ |
h |
Subtract f from g. If the result is less than or equal to $1, write 0 at h and i. |
$ |
i |
Divide h by 2. |
$ |
The amount at i is your assessable amount from your capped defined benefit income stream.
Write the amount from i at M item 7.
Step 2
Add taxed elements you received when you were under 60 years old from your capped defined benefit income stream, and write the total at J item 7.
Add lump sum in arrears taxed element amounts you received when you were under 60 years old, and write the total at Y item 7.
Add up all your untaxed elements, and write the total at N item 7.
Add up the lump sum in arrears untaxed elements, and write the total at Z item 7.
Do not continue to step 3. You have now finished this question. Where to go next.
Step 3
Complete worksheet 4 only if:
- you completed c in worksheet 3A
- you have a capped defined benefit income stream which is not a reversionary income stream.
The amount at j is your assessable amount from your capped defined benefit income stream.
Write the amount from j at M item 7.
Step 4
Add taxed elements you received when you were under 60 years old from your capped defined benefit income stream, and write the total at J item 7.
Add lump sum in arrears taxed element amounts you received when you were under 60 years old, and write the total at Y item 7.
Add up all your untaxed elements, and write the total at N item 7.
Add up the lump sum in arrears untaxed elements, and write the total at Z item 7.
Tax tips
You may be entitled to the:
- seniors and pensioners tax offset; for more information see question T1 Seniors and pensioners (includes self-funded retirees) 2021
- superannuation income stream tax offset; for more information see question T2 Australian superannuation income stream 2021.
See also:
Where to go next
- Go to question 8 Australian superannuation lump sum payments 2021.
- Return to main menu Individual tax return instructions 2021.
- Go back to question 6 Australian Government pensions and allowances 2021.