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Changes to Capped Defined Benefit PAYG payment summaries

For the 2017-18 financial year, the Australian Taxation Office (ATO) has made some changes to what is reported on PAYG summaries.

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You may have noticed a change to the information displayed on your PAYG payment summary from us for the financial year ending 30 June 2018.

 

This change was at the direction of the Australian Taxation Office (ATO). From 1 July 2017, the way capped defined benefit income streams are taxed changed. These changes occurred as a result of the introduction of the $1.6 million Transfer Balance Cap, and the defined benefit income cap.

All CSS, PSS, MilitarySuper, DFRDB, ADF Cover, DFRB, 1922 and PNG pensions are Capped Defined Benefit income streams.

If you are 59 years of age or less, and receiving a pension from your spouse who was over 60 when they died

The value of the tax offset on your PAYG payment summary is now displayed as NIL. This is because CSC are no longer required to pre-populate your tax offset as we are unable to determine whether you have income from other providers which would mean you are in excess of your defined benefit income cap. Although the tax offset is shown as NIL on your PAYG payment summary, CSC has still applied the offset on a fortnightly basis throughout the financial year, unless you have requested us not to.

If you are over 60 years of age

As above, the value of the tax offset on your PAYG payment summary is now displayed as NIL. This is because CSC are no longer required to pre-populate your tax offset as we are unable to determine whether you have income from other providers which would mean you are in excess of your defined benefit income cap. Although the tax offset is shown as NIL on your PAYG payment summary, CSC has still applied the offset on a fortnightly basis throughout the financial year, unless you have requested us not to.

If you are 59 years of age or less

There are no changes to how your pension information is displayed. The value of the tax offset that has been applied to the taxed element of your pension (if applicable) will be displayed on your PAYG payment summary.

Taxation of income streams

The taxation of your income streams have changed where the combined total income from all of these streams is in excess of your defined benefit income cap for the year, and you are:

  • 60 years of age or older; or
  • under 60 and in receipt of a death benefit income stream where the deceased was 60 or over at the  time of death.

Generally your defined benefit income cap for 2017/18 will be $100,000, although this may be reduced in some circumstances—including if you turn 60 during the year, or you were over 60 and started to receive income from a capped defined benefit income stream for the first time during that year.

If your income from all of your capped defined benefit income streams exceeds your defined benefit income cap (generally $100,000) then you may:

  • need to include more of your pension income in your assessable income; and/or
  • have a reduced entitlement to the tax offset.
Next steps

As a result of these changes you are now required to calculate your tax offset entitlement as part of lodging your income tax return.

If you are using MyTax to do your tax return, the information provided from all your funds will be prefilled and there will be an option to calculate, display and save your defined benefit income cap, the values to be reported at each label and your entitlement to the offset.

The instructions for the paper return have also been updated by the ATO and if you are preparing a paper return, you can calculate your tax offset amount using the ATO calculator:  www.ato.gov.au/Calculators-and-tools/Host/?anchor=DBICT&anchor=DBICT&anchor=DBICT/questions/#DBICT/questions/

*If you have already completed your tax return and believe you did not include your tax offset you may want to contact your tax agent or amend your return.

 

Further information on the ATO website

To calculate your tax offset:
To amend a tax return:

 

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