SMSFs reminded on upcoming PAYG withholding obligations

The ATO said a fund will have PAYG withholding obligations for the super benefits it pays to members that are under 60 and the benefit is an income stream or a lump sum.

It will also have PAYG withholding obligations for members who are under 60 and the death benefit is a pension which is a capped defined income stream where the deceased was 60 or over when they died. It will also have obligations where the members are 60 or over and the benefit is a pension which is a capped defined benefit income stream.

“Capped defined benefit income streams include life expectancy and market-linked pensions which were payable before 1 July 2017 and reversionary income streams paid to beneficiaries,” the ATO said.

“If you have pay as you go (PAYG) withholding obligations in 2018–19, you must provide your member with a PAYG payment summary by 14 July 2019 and lodge a PAYG withholding payment summary annual report with us by 14 August 2019.”

The ATO pointed out that funds must provide this information even where they are paying an income stream and the rate of withholding is nil.

“This allows us to ensure the individual pays the correct rate of tax once all their pension income from all their funds is taken into consideration,” it said.

“Members who receive a capped defined benefit income stream can use our defined benefit income cap tool to help them calculate how much income they need to include in their assessable income for the 2018–19 year and where they need to include it.”