Senior Australians tax offset - calculating your tax offset

Introduction

The senior Australians tax offset allows eligible people to earn more income before they pay tax and the Medicare levy. In some cases it may result in a person no longer having to lodge a tax return.

This fact sheet shows you how to calculate your total tax offset.

See the end of this fact sheet to find out how to get more information about the senior Australians tax offset.

Calculating the amount of your senior Australians tax offset

Remember, you don’t have to work out your tax offset. We will work it out for you from the information you provide in your tax return.

However, if you want to calculate how much senior Australians tax offset you can use one of the two worksheets provided. Use the worksheets only if you are eligible for the senior Australians tax offset. Each worksheet is used for different circumstances.

To find out if you are eligible, see the fact sheet Senior Australians tax offset: general information.

Use Worksheet 1 if:

• a transfer of spouse’s unused senior Australians tax offset (see below) or pensioner tax offset does not apply to you, and
• your taxable income is greater than your income threshold but less than your cut-out threshold in the thresholds table below.
• If your taxable income is equal to or less than your income threshold, you do not need to calculate your tax offset as the full tax offset will be used to offset any tax you need to pay.
• If your taxable income is equal to or greater than the cut-out threshold, your tax offset is reduced to nil.

Income thresholds

Category	Senior Australians tax offset	Income threshold	Cut-out threshold
You were single.	$2,230	$20,500	$38,340
You had a spouse for the whole income year.	$1,602	$16,806	$29,622
You had a spouse but lived apart due to illness.	$2,040	$19,383	$35,703

Use Worksheet 2 if:

• a transfer of spouse’s unused senior Australians tax offset or pensioner tax offset applies to you (see below), and
• your taxable income is greater than your income threshold in the above table.

What is a transfer of unused spouse’s tax offset?

If you are entitled to the senior Australians tax offset, you can transfer in any portion of your spouse’s unused senior Australians or pensioner tax offset.

The cut-out thresholds for entitlement to the senior Australians tax offset are based on your own taxable income. Those cut-out thresholds will increase if you:

• are married or separated from your spouse because of illness, and
• can transfer in any portion of your spouse’s unused tax offset.

A transfer of unused spouse’s senior Australians tax offset or pensioner tax offset can occur only where:

• both you and your spouse are eligible for either the senior Australians tax offset or the pensioner tax offset
• your spouse’s tax offset exceeds their tax payable, and
• your tax payable exceeds your tax offset amount.

Note:

In calculating the amount of unused senior Australians tax offset or pensioner tax offset, no other tax offsets or credits are taken into account.

When looking at a transfer of unused tax offset, the person receiving the excess is referred to as ‘the taxpayer’ and the person who has the excess or unused tax offset is referred to as ‘the spouse’. You will need to decide who is the taxpayer and who is the spouse.

Example

Sonya is eligible for a senior Australians tax offset and her spouse Russell is eligible for a pensioner tax offset. When Russell has used his tax offset to reduce the tax he has to pay to nil, there is some pensioner tax offset left over. Sonya can use this excess to offset the amount of tax she has to pay. This is a transfer of unused spouse’s tax offset. In this case Sonya is the taxpayer and Russell is the spouse.

What is included in spouse’s taxable income for transfer purposes?

This depends upon whether your spouse is eligible for the senior Australians tax offset or the pensioner tax offset.

If your spouse is eligible for the senior Australians tax offset, their taxable income for the purposes of calculating the transfer includes their share of trust income on which the trustee is assessed under section 98 of the Income Tax Assessment Act 1936.

If your spouse is eligible for the pensioner tax offset, their taxable income for the purposes of calculating the transfer includes any exempt pension income.

Worksheet 1

Individual tax offset calculation for 2003–04

Category	Senior Australians tax offset	Income threshold
You were single.	$2,230	$20,500
You had a spouse for the whole income year.	$1,602	$16,806
You had a spouse but lived apart due to illness.	$2,040	$19,383

Calculation

Your taxable income	A	$
The relevant income threshold that applies to you—from the above table	B	$
Take B from A.	C	$
The relevant senior Australians tax offset that applies to you—from the above table	D	$
Divide C by 8.	E	$
Take E from D.	F	$
		This is your tax offset

The calculation of your tax offset is only for your information. Do not write the amount you have worked out anywhere on your tax return.

Worksheet 2

Tax offset calculation for 2003–04, including transfer of your spouse’s unused tax offset

Part A

Category	Senior Australians tax offset	Pensioner tax offset
You had a spouse for the whole income year.	$1,602	$1,424
You had a spouse but had to live apart due to illness.	$2,040	$1,782

Calculation of unused spouse’s tax offset

Your spouse’s tax offset amount—from the above table	A	$
Your spouse’s taxable income If your spouse is eligible for the senior Australians tax offset, their taxable income includes any section 98 trust income. If your spouse is eligible for the pensioner tax offset, their taxable income includes exempt pension income.	B	$
Take $6,000 from B. If B is less than $6,000 write ‘0’.	C	$
Multiply C by 0.17.	D	$
Take D from A. If D is more than A there is no unused tax offset available to transfer as your spouse’s taxable income is too high.	E	$ If the amount is more than zero this is the unused spouse’s tax offset available for transfer.

Once you have completed Part A you need to complete Part B to determine the actual amount of your tax offset.

Part B

Individual tax offset calculation for 2003–04, including the transfer of spouse’s unused tax offset

Your taxable income	F	$
The senior Australians tax offset amount that applies to you—from the table in part A	G	$
Add E (from part A) and G.	H	$
Add $235 to H.	I	$
Divide I by 0.17.	J	$
Add $6,000 to J.	K	$ If the amount is not in whole dollars round up to nearest whole dollar.
Take K from F. Note: If K is more than F you are entitled to the full tax offset amount at H. You do not need to complete any further steps in the calculation.	L	$
Divide L by 8.	M	$
Take M from H. If M is more than H there is no tax offset available to you as your taxable income is too high.	N	$ If the amount is more than zero this is your tax offset. If the amount is not in whole dollars round up to nearest whole dollar.

The calculation of your tax offset is only for your information. Do not write the amount you have worked out anywhere on your tax return.

Further information

For more information about the senior Australians tax offset, you can:

• refer to other fact sheets in this series – see below
• phone the Personal Tax Infoline on 13 28 61 – press 1 when prompted
• download information from the website at www.ato.gov.au
• phone the National Relay Service on 13 36 77 if you have a hearing or speech impairment, or
• speak to your tax adviser.

If you do not speak English and need help from the Tax Office, phone the Translating and Interpreting Service on 13 14 50.

Other fact sheets in this series

You can order copies of the following fact sheets by phoning 13 28 61 or visiting the Tax Office website at www.ato.gov.au

Senior Australians tax offset: general information (NAT 4807—6.2004)

Senior Australians tax offset: questions and answers (NAT 4809—6.2004)

Please get help from the Tax Office or a professional tax practitioner if you feel this fact sheet does not fully cover your circumstances. We regularly revise our publications to take account of changes to the law and you should make sure that this edition is the latest.

If you try to follow the information contained in this fact sheet, and in doing so you make an honest mistake, you won't be subject to a penalty. However, as well as any underpaid tax, we may ask you to pay a general interest charge.

We make every effort to ensure this information and advice is accurate. If you follow our advice, which subsequently turns out to be incorrect, or our advice is misleading and you make a mistake as a result, you won't be subject to a penalty or a general interest charge although you'll be required to pay any underpaid tax.

The information fact sheet is current at June 2004.

Last Modified: Tuesday, 13 June 2006