Clarification of tax offset calculation for those aged over 60
We wish to issue the following correction and clarification for members in receipt of a tax offset over 60 years of age:
As a result of an update on the Australia Taxation Office (ATO) website for communications to Tax Professionals dated 31 July 2018, RBF has become aware your entitlement to any tax offset is determined as part of completing your tax return.
- If you have a tax advisor they will determine the offset based on your overall tax position.
- If you are submitting a return on your own behalf - you are responsible for determining the offset. A worksheet and/or a calculator is provided on the ATO website for your reference below.
As we highlighted in our recent correspondence, RBF is no longer required to pre-populate PAYG payment summaries with your tax offset entitlement on an untaxed element. This is because we are unable to determine whether you are in excess of your defined benefit income cap (as we don't know if you have multiple income streams from different providers).
Important points to note
- Your PAYG payment summary from us displays the tax offset as $0. Unfortunately, showing a zero amount on your summary has created some confusion. Our intention was to indicate that the amount of any offset was not required to be reported to the ATO for pensioners aged over 60;
- the ATO documentation in relation to the offset specifies that in circumstances where a superannuation fund has provided an offset amount for people aged over 60 in the PAYG summary, that amount is to be disregarded by taxpayers; and
- an amount of tax offset is specifically provided for (withheld) from your RBF pension that is paid to your bank account. The final correct overall level of offset can only be determined having regard to your full financial circumstances (which is why the ATO require taxpayers or their tax professionals to complete the calculation).
We sincerely apologise for any confusion caused.
It is important that you note that Taxation of capped defined benefit superannuation income streams is a complex area. The ATO has detailed instructions for completion of your tax return.
For more information, please contact the ATO on 13 28 65 or visit ato.gov.au.