SMSF members who are receiving capped defined benefit income streams have just under a month to lodge a pay-as-you-go (PAYG) withholding payment summary annual report with the ATO, which has also informed members they should have received a pension payment summary at the start of this week.
The ATO made the double reminder in a note to SMSFs and their members via its website, pointing out that if an SMSF member receives any capped defined benefit income streams, they may have additional tax liabilities, including calculating their entitlement to the 10 per cent tax offset.
These additional liabilities will apply if the income from all the member’s capped defined benefit income streams exceeds their defined benefit income cap, the SMSF regulator stated, adding the pension payment summary from the fund was supposed to have been sent to members by 14 July.
“You must also lodge a PAYG withholding payment summary annual report with us by 14 August 2019. This is required even if the amount you withhold from the pension the SMSF pays to them is nil,” it added.
To clarify whether an SMSF member had a defined benefit income cap, it pointed out this was only the case where members had income from a capped defined benefit income stream and were aged 60 or over, or they were under 60 and receiving a death benefit income stream from a person who died aged 60 or over.
Where an SMSF member was receiving a defined benefit income cap, it pointed out they would have to record this on their individual tax return by taking into consideration all of the income they received from capped defined benefit income streams.
SMSF members would then be required to report half of the income from the tax-free component and taxed elements of all their capped defined benefit income streams that exceeds their defined benefit cap at label 7M, include any untaxed element at label 7N and calculate their entitlement to the 10 per cent tax offset and include it at label T2, even if it is nil.
