My wife commenced PSS capped defined benefit superannuation income stream on 24 October 2022. This DOES NOT include a Death Benefit (Reversionary income stream). The following 2024 PAYG Summary is provided for example: Taxed Element $20,000; Untaxed Element $42,000; Tax Free Component $21,000 and Tax Withheld $1,200; and there is no Lump sum in arrears components. Firstly from my calculations the tax withheld is very close to the amount of tax I have calculated to be payable i.e. Tax on the $42,000 untaxed element is around $5,400 less the rebate ($42,000 @ 10%) $4,200 resulting in tax payable of $1,200 so I think all good at this point.
On reading the 2024 Tax Return Guide Completing your tax return for Item 7 I become confused. In a simplistic approach I would have thought the following to apply: (1) The tax withheld from the PAYG Summary of $1,200 is entered under the Tax Withheld column; (2)The taxable component from the PAYG Summary of $20,000 is entered at 7J; (3) The Untaxed element from the PAYG Summary is entered at 7N; I am unclear of the value to be inserted at 7M (but note potential approaches below); and (4) there are no values to be entered into 7Y or 7Z as previously noted there have been no receipt of Lump sum in arrears payments. I also understand at Tax Offset T2 I enter 10% of the Untaxed element identified at 7N i.e. $42,000 @ 10% or $4,200
On my further reading my concern is - Do I apply approach In Part C and Worksheet 2 or Part D Worksheet 3A and 3B?
When I complete Part C approach I do not insert any values in 7J or 7Y. For 7M the following calculation would apply (a) Tax free component + Taxed element = $41,000; (b) Benefit cap $118,750; (c) subtracting (b) from (a) is a negative value resulting in a $0 value for (c) and (d). My understing for this approach is: 7J leave blank; 7N insert Untaxed element $42,000; 7M is $0; 7Y leave blank; and 7Z leave blank as no benefit received.
OR
When I complete Part D Step 1 Worksheet 3A and 3B I have the following (a) Number of days in 2023-24 from when first started to receive income stream 366; (b) My wife turned 60 before starting to receive the revenue stream which was on 24 October therefore number of days to 30 June 2024 is 616; (c) Number of days receiving a reversionary stream is 0 as no reversioary income was received; (d) result here is the highest number which is 616. Worksheet B (e) is 616/366*100 = 168; (f) 168*$1,000 = $168,000; (g) Tax free component from PAYG Summary $21,000 + Taxed Element $20,000 for a total of $41,000; (h) subtracting f from g is less than $0 therefore enter $0; (i) divide (h) by 2 and still have $0. Based on this I thought I would complete 7J $20,000; 7N $42,000; 7M $0; 7Y $0; and 7Z $0.
Advice on the correct approach would be most welcome. Regards
243 views
1 replies