Part A

When to use part A

Use this part where the payee is:

• below 60 years of age and is receiving a super income stream including a death benefit income stream
• 60 years of age or over and is receiving a super income stream that is not a capped defined benefit income stream with an untaxed element.

If the payee turns 60 during the financial year and is in receipt of a capped defined benefit income stream, then you will also need to complete part E for post-60 income stream payments.

Withholding steps

Step 1: Use the following table to work out which elements of the taxable component withholding applies to.

How to apply withholding when taxable component contains untaxed element

Age of the payee	Taxable component of super income stream contains		Withholding applies to the following element(s)
	Untaxed element	Taxed element
Below 60	Yes	Yes	Sum of untaxed and taxed elements
Below 60	No	Yes	Taxed element
Any age	Yes	No	Untaxed element

Note: Do not withhold where the payee is receiving an account-based super income stream with a taxed element and tax-free component and is aged 60 years or older.

Step 2: Use the appropriate PAYG withholding tax table to calculate the withholding amount relevant to the amount worked out in step 1.

The tax table you use depends on the period the super income stream covers – that is, weekly, fortnightly or monthly.

Note: Some payees aged 60 years or over may be eligible to claim the seniors and pensioners tax offset (SAPTO). If the payee gives you a Withholding declaration indicating they want to claim a SAPTO entitlement through PAYG withholding, you should use the Schedule 9 - Tax table for seniors and pensioners to work out the amount to withhold from the amount calculated in step 1.

Step 3: Some payees may be eligible for a tax offset. Use the following table to work out the tax offset amount for the payee.

Super income stream – taxable component

Age of payee	Tax offset
Below preservation age	Nil
60 years or over	Untaxed element × 10%

Super death benefits paid to a dependant

Age of deceased	Age of recipient	Tax offset
Below 60 years	Below 60	Taxed element × 15%
Below 60 years	60 and over	Untaxed element × 10%
60 years or over	Any age	Untaxed element × 10%

Disability super income stream – taxable component

Age of payee	Tax offset
Below preservation age	Taxed element × 15% Untaxed element = Nil
60 years or over	Untaxed element × 10%

Step 4: For some payees, the application of the offset from step 3 leads to under withholding for their Medicare levy.

An offset adjustment is required where the tax offset calculated in step 3 is greater than zero.

Use the applicable formulas below to calculate the offset adjustment amount.

You will need to calculate the weekly equivalent of the taxable component or untaxed element if making fortnightly, monthly or quarterly payments.

If an offset adjustment is not required, set the offset adjustment to zero.

Adjustment amounts per taxable component amount

Equivalent amount (on a weekly basis)	Offset adjustment amount
	Under 60 years of age	60 years of age or over
Less than the Medicare levy threshold for singles	Nil	Nil
Greater than the Medicare levy threshold for singles, but less than the Medicare levy shade out point (SOP) for singles	(Taxable component − Medicare levy threshold for singles) × 0.10	(Untaxed element − Medicare levy threshold for singles) × 0.10
Greater than or equal to the Medicare levy SOP for singles, but less than $1,181	Taxable component × 0.02	Untaxed element × 0.02
Greater than $1,180	Nil	Nil

Medicare levy parameters are contained in Schedule 1 – Statement of formulas for calculating amounts to be withheld.

Step 5: Calculate the notional amount to withhold by first subtracting the tax offset per payment (step 3) from the withholding amount (step 2).

Notional amount to withhold = withholding amount − tax offset

Then compare the notional amount to withhold with the offset adjustment amount calculated at step 4.

If the notional amount to withhold is:

• less than the amount calculated at step 4, withhold the amount calculated at step 4
• more than the amount calculated at step 4, withhold the notional amount to be withheld.

Tax-free component

If the super income stream is being paid to a payee under 60 years of age, you do not need to consider their tax-free component when calculating their withholding.