Senior Australians & Pensioner Tax Offset explained

After working (and paying taxes) for most of your life, it can be a good feeling to get to that stage of your life where it’s time to get some pay-back from the taxman. Your golden years can be given an extra glow by claiming the Senior Australians and Pensioner Tax Offset (SAPTO), if you qualify.

What is a ‘tax offset’?

Generally speaking, a tax offset can reduce your tax bill, but doesn’t lessen “taxable income”, just the tax owing on it. So a tax offset can reduce tax to zero in theory, but will never in itself result in a refund. And since receiving an offset can make you liable for less tax, you can earn more income before paying any tax (and the Medicare levy).

What is the SAPTO?

The SAPTO is an amalgamation of two previous offsets, the Senior Australian Tax Offset (SATO) and Pensioner Tax Offset (PTO). The previous offsets were last able to be claimed in the 2011-12 income year. The new SAPTO can be claimed from the 2012-13 income year onward.

Generally, due to the merging of the previous two offsets, taxpayers able to access the SAPTO concession, according to the Tax Office, are either of the following two types of taxpayers:

1. a taxpayer who during the income year:

  • received a government pension, allowance or benefit from Centrelink or Veterans Affairs
  • has reached pension age, and
  • is not in gaol (yes, the Tax Office actually stipulates this), OR

2. a taxpayer who during the income year:

  • became eligible for a government pension or benefit but did not receive one, and
  • is not in gaol.

This definition means veterans who were eligible for a pension but did not receive one (perhaps due to not meeting the income or asset requirements) and persons not meeting the residency requirements for an aged pension, but were eligible for that pension using an alternate test, could be able to access this offset.

TIP: The Low Income Tax Offset (LITO) of up to $445 (from 2012-13) may also apply in conjunction with SAPTO, depending on personal circumstances. Ask this office if you think this may apply.

The table below details the offset thresholds and maximum offset rates.

However it should be noted that calculating the SAPTO can be finicky and complex, especially where taxpayers are part of a couple where both partners are eligible. The difficulty lies in working out the amount of unused SAPTO transferred between the couple. The reason this may cause confusion is because this part of the calculation may be based on rates and thresholds from previous financial years.

There are SAPTO calculators on the Tax Office website. Also ask this office for guidance or for more information.

SAPTO 2013-14

Rebate income
Eligibility condition Threshold maximum tax offset applies Above threshold no longer eligible Maximum rebate amount
You did not have a spouse and your rebate income was less than… $32,279 $50,119 $2,230
You had a spouse and the combined rebate income of you and your spouse was less than… $57,948 $83,580 $1,602
At any time during the year you and your spouse had to live apart due to illness or because one of you was in a nursing home and the combined rebate income of you and your spouse was less than… $62,558 $95,198 $2,040
NOTE: No change to the maximum tax offset values or the reduction rate 12.5 cents applied for every $1 over the maximum rate threshold up to the cut off threshold.
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