Senior Australians tax offset - general information

What is the senior Australians tax offset?

The senior Australians tax offset is a tax offset available to anyone who meets certain eligibility conditions. The tax offset allows you to earn more income before you pay tax and the Medicare levy. In some cases it will result in no longer having to lodge a tax return.

Who is eligible for the senior Australians tax offset?

You may be entitled to the senior Australians tax offset if you meet all of the following conditions:

• condition 1 – age
• condition 2 – eligibility for Commonwealth age pension and similar payments
• condition 3 – taxable income threshold, and
• condition 4 – not in prison.

Condition 1 – age

You satisfy this condition for 2003-04 income year if, on 30 June 2004, you are:

• a male aged 65 years or more or a female aged 62.5 years or more, or
• a male veteran or a war widower aged 60 years or more or a female veteran or war widow aged 57.5 years or more.

Who is a ‘veteran, war widow or war widower’?

A ‘veteran’ is a person who served in:

• the Australian Defence Force
• the Defence Force of a Commonwealth or allied country, or
• an Australian or allied mariner, and

is eligible for a pension, allowance or benefit under the Veterans’ Entitlements Act 1986. This includes a disability pension, service pension, or a white or gold Repatriation Health Card for treatment entitlements.

To be a ‘war widow’ or ‘war widower’ you must be receiving a war widow’s or war widower’s pension from the Department of Veterans’ Affairs (DVA), or receiving a foreign government pension of a similar nature to the Australian war widow’s pension or war widower’s pension.

If you are unsure if you are a veteran or you qualify for the earlier veteran pension age, visit the DVA website at www.dva.gov.au or phone DVA on 13 32 54.

Condition 2—eligibility for Commonwealth age pension and similar payments

You satisfy this condition if one of the following circumstances applies:

• you received a Commonwealth of Australia government age pension or a pension or allowance from DVA at any time during the year
   
• you did not receive a Commonwealth of Australia government age pension because you did not make a claim, or because of the application of the income test or the assets test, and you:
• have been an Australian resident for either 10 continuous years, or more than 10 years, of which five years were continuous
• have a qualifying residence exemption (arrived as a refugee or under a special humanitarian program)
• are a woman who is widowed in Australia (at a time when both you and your late partner were Australian residents) and you have 104 weeks residence immediately before the claim for age pension
• received a widow B pension, widow allowance, mature age allowance or partner allowance immediately before turning age pension age, or
• would qualify under an International Social Security Agreement
   
• you are a veteran with eligible war service who is eligible for, but not receiving, a payment from DVA because you did not make a claim, or because of the application of the income test or the assets test, or
   
• you are a Commonwealth veteran, allied veteran or allied mariner with qualifying war service who is eligible for, but not receiving, a payment from DVA because you did not make a claim, or because of the application of the income test or the assets test.

Note:

You can still claim the senior Australian tax offset if you are eligible for one of the payments or pensions mentioned above, but you are not receiving these payments.

If you need assistance to work out if you are eligible for a social security or Centrelink pension, ring Centrelink on 13 23 00. If you need assistance to work out if you are eligible for a DVA payment or qualifying service, phone DVA on 13 32 54.

Condition 3 – taxable income threshold

To satisfy this condition, one of the following thresholds must apply to you:

Category	Taxable income threshold
Single	Less than $38,340
Illness—separated	Less than $71,406* (combined)
Married	Less than $59,244* (combined)

* If you have a spouse, married or de facto, this eligibility test is based on the combined income of you and your spouse. Use the following table for information on how the combined taxable income threshold affects your eligibility for the senior Australians tax offset.

If your combined taxable income...	Then...
equals or exceeds your eligible combined taxable income threshold	neither you nor your partner is eligible for the senior Australians tax offset.
is less than your eligible combined taxable income threshold	your senior Australians tax offset entitlement depends upon: your own taxable income, and your eligibility for a transfer of any unused portion of your spouse’s senior Australians or pensioner tax offset.

The source of your taxable income does not affect your eligibility for the tax offset. Eligibility for the senior Australians tax offset is not restricted to self-funded retirees. You can be eligible for the tax offset whether you receive:

• a Commonwealth of Australia government age pension
• a superannuation pension or an overseas pension
• income from investments, or
• any other assessable income (including salary or wages).

Although the source of your income does not affect your eligibility, the amount of your taxable income can.

For further information refer to the fact sheet Senior Australians tax offset: calculating your tax offset.

Note:

If your marital status changed during the year, you will be entitled to the tax offset that gives you the greatest benefit. However, you still need to meet the income test for the senior Australians tax offset that applies to your circumstances.

Condition 4 – not in prison

You cannot receive a senior Australians tax offset if you were imprisoned for the whole of the income year.

How much senior Australians tax offset can I use?

The amount of senior Australians tax offset you can use depends on your personal circumstances and the amount of taxable income you receive.

If you have a spouse, the calculation of your actual entitlement is based on your individual income, even though eligibility for the senior Australians tax offset is dependent on you and your spouse’s combined taxable income (see condition 3).

The table below shows how much tax offset you may be entitled to use.

You do not have to work out your tax offset. We will work it out for you from the information you provide in your tax return. You should ensure that you complete question 6 and/or T2 or T3 in TaxPack 2004 or question 1 and/or 20 (or 21) in Retirees TaxPack 2004. If you have a spouse, you should also complete the Spouse details section of your tax return.

However if you wish to work out the amount, refer to the fact sheet Senior Australians tax offset: calculating your tax offset and follow the instructions on the worksheet appropriate to your circumstances.

Income thresholds and senior Australians tax offset

Category	2004 income threshold	2004 cut-out income threshold	Maximum tax offset available
If you were single	$20,500	$38,340	$2,230
If you had a spouse for the whole income year	$16,806	$29,622	$1,602
If you had a spouse but lived apart due to illness or either of you was in a nursing home	$19,383	$35,703	$2,040

• If your taxable income was below your income threshold you can use the maximum amount of the senior Australians tax offset. At this income threshold, the tax payable is reduced to nil after allowing for the senior Australians tax offset and the low income tax offset. For example, a single person with a taxable income of $20,500 will have their tax payable of $2,465 reduced to nil by the allowance of the senior Australians tax offset ($2,230) and the low income tax offset ($235).
   
• If your taxable income is more than your income threshold but less than the cut-out income threshold you will have a reduced amount of the senior Australians tax offset to use. However, where you have a spouse and you have available a transfer of unused spouse’s senior Australians tax offset or pensioner tax offset, the amount of tax offset may be higher. For more information see the fact sheet Senior Australians tax offset: calculating your tax offset.
   
• If your taxable income is equal to or more than your cut-out income threshold you will have no senior Australians tax offset to use because your income is too high. The cut-out threshold only applies where you do not have any transfer of unused spouse’s senior Australians tax offset or pensioner tax offset.

If you have a transfer of unused spouse’s tax offset you may still get some senior Australians tax offset even though your own taxable income exceeds the cut-out threshold. For more information see the fact sheet Senior Australians tax offset: calculating your tax offset.

Medicare levy and the senior Australians tax offset

If you are eligible for the senior Australians tax offset you pay no Medicare levy if your taxable income is $20,500 or less. For more information on the Medicare levy income and the senior Australians tax offset see question M1 in TaxPack 2004 or question 26 in Retirees TaxPack 2004.

Further information

If you would like more information about the senior Australians tax offset, you can:

• refer to other fact sheets in this series – see below
• call the Personal Tax Infoline on 13 28 61 – and 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: questions and answers (NAT 4809—6.2004)

Senior Australians tax offset: calculating your tax offset (NAT 4808—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 information is current.

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.

This fact sheet is current at June 2004.

Last Modified: Thursday, 15 June 2006