When to withhold tax
You must withhold tax from benefit payments to super fund members who are:
- under 60 years old
- under 60 years old and receives a reversionary capped defined benefit income stream – if the deceased was 60 years or over when they died
- 60 years old or over – if the benefit is from a capped defined benefit income stream.
If you withhold tax, you need to:
- register for pay as you go (PAYG) withholding
- obtain a Tax file number declaration from the member
- if the recipient doesn't provide their tax file number (TFN) before the payment is made, you must withhold tax at the top marginal rate (47% for residents or 45% for non-residents) from the taxable component
- if the recipient is a foreign resident for tax purposes, you'll need to check if there's a tax treatyExternal Link with their country of residence. The tax treaty will tell you if the benefit payment will be assessable income in Australia or the other country – if it's only assessable in the other country then no tax needs to be withheld
- pay withheld amounts to the ATO
- issue a PAYG payment summary to the member
- lodge a PAYG withholding payment summary statement with us, usually by 14 August.
Provide payment summary to recipient
When you pay a super benefit that contains an assessable amount you must give a payment summary to the recipient covering the details of the payment, including:
- tax-free component
- taxable component
- tax offset (if applicable)
- tax withheld (if applicable).
For income streams you must provide a PAYG payment summary by 14 July following the end of the financial year in which the payment was made.
For lump sums you must provide a PAYG payment summary within 14 days of making the lump sum payment.
You should provide a separate payment summary if:
- they're receiving a super income stream, and the member is 59 years old or younger
- they're receiving a capped defined benefit income stream, and the member is 60 years or over and is in receipt of a capped defined benefit income stream
- the member is 59 years old or younger and is in receipt of a reversionary capped defined benefit income stream where the deceased was 60 years or over at the time of death
- a super lump sum was paid to
- a non-dependant in the event of another person's death
- the trustee of a deceased estate.
Payment summaries should be issued in these situations even if no tax has been withheld.
A payment summary isn't required where a lump sum is paid to a member because of a terminal medical condition.
For more information, see: