Have you heard about the seniors and pensioners tax offset (SAPTO)? It won’t make you rich, but it could be a handy cut to your tax bill.
SAPTO could reduce your tax by up to $3204 depending on your circumstances, but like many government ‘boosts’ it’s not a simple process to claim or qualify.
First of all, what is it? As the name would suggest, SAPTO is a tax offset for older people who receive a Centrelink payment or who are of Age Pension age. In some cases, it may reduce your tax responsibilities to zero. Sounds great right?
However, the eligibility is quite strict, you must meet at least one of the following criteria:
- Be of Age Pension Age or Department of Veterans’ Affairs pension age
- Be on an eligible Centrelink payment including the Age Pension, Carer Payment, a veteran payment or Disability Support Pension.
- Be of Age Pension age and eligible for the Age Pension during the income year, but you didn’t receive it because you didn’t make a claim or because of the income test or assets test
If you qualify under the last listed in the above circumstances, you must also meet one of the following conditions:
- Be an Australian resident and living in Australia
- You had been an Australian resident for age-pension purposes for 10 years or more. At least five years were continuous.
Your income will determine how much offset you receive. The following are the Australian Tax Office (ATO) income limits.
The criteria ‘illness separated couple’ refers to situations where you and your spouse don’t live together because one or both of you have an indefinitely continuing illness or infirmity. As a result, your combined living expenses are increased.
According to the ATO, to be entitled to the offset, your rebate income must be less than the relevant cut-out threshold in the table above. You receive the maximum offset if your rebate income is less than the shading-out threshold.
Where the taxpayer’s offset income does not exceed the shade-out threshold, the full amount of the offset is available. The offset shades out at 12.5 cents for each dollar of offset income above the shade-out threshold. Where the offset income reaches the cut-off threshold, the offset cuts out altogether.
Sounds confusing because it is. Thankfully, the ATO has drafted a nifty online tool to work if you are eligible and your possible offset amount and you can find it here.
If you and your spouse are eligible for the SAPTO, and one of you does not use all of it, the balance can be transferred to your spouse. Once again, it sounds confusing, but if you are claim the SAPTO as a couple the ATO will calculate and transfer any amount when you submit a claim with your tax return. You can use the same above online tool to work out if you and your spouse are eligible and your possible offset amount.
For the purpose of SAPTO the ATO includes income from:
- your rebate income
- your spouse’s rebate income
- the amount a trustee of a trust was liable to pay tax for your spouse who was under a legal disability. For example, they were an undischarged bankrupt or a person declared legally incapable because of a mental condition.
The rebate income threshold doesn’t include any income you may be receiving from super. That’s because income from super is generally tax free if you’re aged over 60.
Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.
Have you heard of this tax rebate? Will you apply for it? Why not share your thoughts in the comments section below?
Also read: Super rules ‘confusing’ older Aussies say.
Yes SAPTO is a godsend for CSHC holders. Tax year 2024 is the first year in many, due to the higher interest rate environment, that we have been required to lodge a tax return. For the last about 5 years we have had our franking credits automatically paid out by the ATO because the interest rates were so low that we hardly made any interest on our investments.