The ATO has called on self-managed funds to check whether they are meeting new pay-as-you-go (PAYG) withholding obligations for capped defined benefit income streams paid to their members.
SMSFs have PAYG obligations to withhold tax from income streams that have been paid to their members in circumstances where:
The member is 60 years or older.
The member is under 60 years and has a death benefit capped defined income stream (where the deceased was 60 years or over when they died).
If you have no tax that you need to withhold from a member’s super, then you are required to provide the individual with a pension payment summary and lodge a PAYG withholding summary with the ATO. This should be done by 14 August, following the end of the financial year that the payment was made.
An amnesty scheme which ended earlier this month has caused around 24,000 businesses to admit to underpayment of their worker’s super. A total of 588 million dollars will be distributed to almost 400,00 individuals.
The scheme, which covered payments from the introduction of super in 1992, gave employers the opportunity to come clean without any consequences as long as they paid the unpaid super as well as 10% interest for every year the money was overdue.
The ATO will be directing its attention at any businesses that did not admit fault and these businesses will face severe penalties.
Many individuals are looking to access their superannuation early in order to have support during these times. Although there is criticism of early access to super, this facility has been helpful to many families to keep afloat.
