Lump sum withdrawals
Lump sum withdrawals can be taken from your accumulation account or as a “commutation” of part or all of your income stream.
Lump sums have the following general characteristics:
- they are tax free for those 60 years and over when the payment is made
- they are tax free for those under 60 years for both the tax free component and amounts within the members lifetime low rate threshold amount
- they are otherwise taxable
Before taking a lump sum withdrawal, you need to know the rules and possible seek the advice of a professional.
PAYG withholding and administrative obligations
You may have to withhold tax from benefit payments. This happens if the payment is to a member who is:
- under 60 years old
- 60 years old or over if the benefit is from an untaxed source.
If you have to withhold tax from a benefit payment to a member, you need to:
- register for pay as you go (PAYG) withholding
- obtain a Tax file number declaration (NAT 3092) from the member
- issue a PAYG payment summary form to the member
- lodge a PAYG withholding payment summary statement (NAT 3447) with the ATO.