ATO flags PAYG obligations for SMSFs with legacy pensions

The ATO has reminded SMSFs that are paying capped defined benefit income streams to members to ensure they are meeting their PAYG obligations.

 

 

In an online update, the ATO said that since 1 July 2017, SMSFs have had pay as you go (PAYG) obligations to withhold tax from income streams they’ve paid to members where the member is 60 years of older or the member is under 60 years old, and it’s a death benefit capped defined benefit income stream where the deceased was 60 years old or over when they died.

“If the amount of tax you need to withhold is nil, you are required to provide the individual with a pension payment summary and lodge a PAYG withholding payment summary with us, usually by 14 August, following the end of the financial year in which the payment was made,” the ATO explained.

“Trustees with these obligations also need to ensure they are registered for PAYG withholding.”

Trustees with these obligations, it said, also need to ensure they are registered for PAYG withholding.

If you’re paying a capped defined benefit income stream to a member, make sure you have met your obligations.

SMSFs should register for PAYG, provide your member and the ATO with your member’s payment summary information and comply with the withholding obligations on your activity statement, the ATO said.

“Your members may also need to lodge or amend their personal income tax return,” the ATO said.

“Your members can use our defined benefit income cap tool to understand if and how income from these pensions needs to be included in their assessable income.”

 

Miranda Brownlee
21 March 2019
smsfadviser.com

 

Free Ebook

22 Key Strategies to Dramatically Improve Cashflow in Your Business

What our clients say

"The team at CP Partners Accounting & CP Financial Planners have provided our clients with expert advice in the areas of taxation, property structures, wealth creation, retirement planning, superannuation, insurance and general investment advice.

"We have undoubtedly found that the team at CP are experts in their fields and our clients have been extremely pleased with the results they have achieved....

Read more