Eligibility for seniors and pensioners tax offset
To be eligible for the seniors and pensioners tax offset (SAPTO) you must:
- be eligible for an Australian Government pension or allowance
- meet income limits for you and your spouse.
The offset can reduce the amount of income tax you pay. We will apply the non-refundable offset when we assess your tax return. You may be able to transfer an unused amount to your spouse if you're both eligible for SAPTO.
You can't claim this tax offset if you were in jail for the whole income year.
You can use the calculator to check your eligibility and calculate the offset amounts.
Beneficiary tax offset and seniors and pensioners tax offset calculator
Eligibility for an Australian Government pension or allowance
You meet this condition if any of the following applied to you in the income year of your claim:
- You received an Australian Government pension or allowance from Centrelink. Only these listed pensions and allowances satisfy this condition
- You received a pension, allowance or benefit from the Department of Veterans’ Affairs (DVA).
- You were age-pension age and eligible for an Australian Government 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. You must also meet one of the following conditions:
- You had been an Australian resident for age-pension purposes for 10 years or more. At least 5 years were continuous.
- You had a qualifying residence exemption. This is because you arrived in Australia either
- as a refugee
- under a special humanitarian program.
- You are a woman who was widowed in Australia, and also
- you and your late partner were Australian residents when your late partner died
- you are currently in Australia
- you have been an Australian resident for at least the last 2 years.
- You received a widow B pension, widow allowance, or partner allowance just before turning age-pension age.
- You would have qualified for an age pension under an international social security agreement.
- You're a woman and on 19 March 2020 you were receiving either
- a wife pension and you were not receiving a carer allowance
- a special needs widow B pension.
- You met the veteran pension age test and were eligible for a pension, allowance or benefit from Veterans’ Affairs 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. You were also either:
- a veteran with eligible war service
- a Commonwealth veteran, allied veteran or allied mariner with qualifying service.
Centrelink age pension age test
To be eligible for an Australian Government age pensionExternal Link from Centrelink, you must be 66 years and 6 months or older on 30 June 2021. This is 67 years or older from 1 July 2023.
Veteran pension age test
To qualify for an age service pensionExternal Link from the Department of Veterans' Affairs, you must meet the veteran pension age test and on 30 June 2021 be at least 60 years old.
You meet the test if you were eligible for a pension, allowance or benefit under the Veterans' Entitlements Act 1986, and one of the following also applies to you:
- You have eligible war service, either
- service in World War II
- operational service as a member of the Australian Defence Force.
- You're a Commonwealth or allied veteran who served in a conflict in which the Australian Defence Force was engaged during a period of hostilities, that is, either
- World War II
- Korea
- Malaya
- Indonesia
- Vietnam.
- You're an Australian or allied mariner who served during World War II.
- You're the war widow or widower of a former member of the Australian Defence Force.
Income limits
You meet this condition if any of the following applied to you in the income year of your claim:
- You didn't have a spouse and your rebate income was less than $50,119.
- You had a spouse and the combined rebate income for you and your spouse was less than $83,580.
- 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 $95,198 (less than $47,599 for each partner).
The combined rebate income is the total of all the following:
- 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 criteria Had to live apart due to illness refers to situations where you and your spouse don't live together. This is because one or both of you have an indefinitely continuing illness or infirmity. As a result, your combined living expenses are increased.
Rates and thresholds for seniors and pensioners tax offset
To be entitled to the offset, your rebate income must be less than the relevant cut-out threshold in the table below. You receive the maximum offset if your rebate income is less than the shading-out threshold.
Status |
Maximum tax offset amount |
Shading-out threshold |
Cut-out threshold |
|---|---|---|---|
Single |
$2,230 |
$32,279 |
$50,119 |
Each partner of a couple |
$1,602 |
$28,974 |
$41,790 |
Each partner of an illness separated couple |
$2,040 |
$31,279 |
$47,599 |
If more than one item in the table above applies to you during the income year, we base your offset on the amount giving you the greatest entitlement.
Examples of SAPTO income thresholds
The following examples show when someone will receive a senior and pensioner tax offset.
Example: couple living together and rebate income below the threshold
Clare and Roy are married and live together. Both Clare and Roy receive an age pension from Centrelink. Clare’s rebate income is $23,020 and Roy’s is $25,677.
Clare and Roy are entitled to SAPTO. This is because half (50%) of their combined rebate incomes of $48,697 (50% × $48,697 = $24,348.50) is less than the cut-off threshold of $41,790.
Clare and Roy each receive the maximum SAPTO amount of $1,602. This is because their rebate incomes are each below the shading-out threshold of $28,974.
End of example
Example: couple living together and combined rebate income above the threshold
Deb and Ivan are married and live together. Both Deb and Ivan receive an age pension from Centrelink. Deb’s rebate income is $64,020 and Ivan’s is $25,677.
Deb and Ivan are not entitled to SAPTO. This is because half (50%) of their combined rebate incomes of $89,697 (50% × $89,697 = $44,848.50) is above the cut-off threshold of $41,790.
End of example
Example: couple living together and combined rebate income below the threshold
Ying and Li Jun are married and live together. They both receive an age pension from Centrelink. Ying’s rebate income is $54,020 and Li Jun’s is $25,677.
Ying and Li Jun are entitled to SAPTO. This is because half (50%) of their combined rebate incomes of $78,697 (50% × $78,697 = $39,848.50) is less than the cut-off threshold of $41,790.
Ying does not receive SAPTO. This is because her income of $54,020 is greater than the cut-off threshold of $41,790.
However, Li Jun receives the maximum SAPTO amount of $1,602. This is because his rebate income is below the shading-out threshold of $28,974.
End of example
Example: single with rebate income exceeding the cut-out threshold
Marko is single and is 67 years old. He qualifies for the Centrelink age pension but does not make a claim for it. His rebate income is $85,690.
Although Marko qualifies for the age pension (but didn’t make a claim for it), he is not eligible for SAPTO. This is because his rebate income is more than the cut-out threshold of $50,119.
End of example
Example: single with rebate income below the threshold
Simon is single and receives a parenting payment (single) from Centrelink. He has a rebate income of $32,178.
Simon is eligible for SAPTO because:
- he receives an Australian Government pension or allowance
- his income is less than the cut-out threshold of $50,119.
Simon is entitled to the maximum SAPTO amount of $2,230. This is because his rebate income is less than the shading-out threshold of $32,279.
End of exampleTax offset reduction
The tax offset reduces by $0.125 for every dollar your rebate income exceeds the relevant shading-out threshold amount. We round up the amount to the nearest whole dollar.
Example: single with rebate income above the threshold
José is single and receives an age pension from Centrelink. He has a rebate income of $39,000.
José is eligible for SAPTO. His rebate income is less than the cut-out threshold of $50,119. He also receives an Australian Government pension.
As José’s rebate income exceeds the shading-out threshold of $32,279, his tax offset is reduced as follows:
$39,000 − $32,279 = $6,721
$6,721 × 0.125 = $840.125
$2,230 − $840.125 = $1,389.875
José is entitled to a SAPTO amount of $1,390.
End of example
Example: couple with spouse not eligible and rebate income above the threshold
Keith and Jean are a married couple living together. Keith receives an age pension from Centrelink. Jean has not reached age-pension age, so does not qualify for it.
Keith’s rebate income is $33,650 and Jean’s is nil. Their combined rebate income is $33,650.
In determining whether they satisfy the cut-out threshold, each is taken to have a rebate income of:
0.5 × $33,650 = $16,825.
Jean is not eligible for the offset. She has not reached age-pension age and is not eligible for an age pension.
Keith is eligible for the offset. His determined amount of rebate income ($16,825) is less than the cut-out threshold of $41,790, and he receives the age pension. However, his actual rebate income is used in calculating the tax offset amount.
Keith’s actual rebate income of $33,650 is more than the shade-out threshold of $28,974. We reduce his tax offset as follows:
$33,650 − $28,974 = $4,676
$4,676 × 0.125 = $584.50
$1,602 − $584.50 = $1,017.50.
Keith is entitled to a SAPTO amount of $1,018.
End of exampleIn some circumstances, a person may be eligible for a senior and pensioner tax offset, but their income amount means the tax offset is reduced to zero.
Example: couple with spouse eligible for SAPTO and rebate income above the threshold
Vanh and his spouse, Mai, live together. They both receive the age pension from Centrelink.
Vanh has a rebate income of $32,590 and Mai's rebate income is $26,780. Their combined rebate income is $59,370. To determine if they satisfy the cut-out threshold, each is taken to have a rebate income of:
0.5 × $59,370 = $29,685.
Both Vanh and Mai are eligible for the offset because:
- they both receive the age pension, and
- their determined amount of rebate income of $29,685 is less than the cut-out threshold of $41,790.
Vanh’s actual rebate income of $32,590 is more than the shade-out threshold of $28,794. His tax offset is reduced as follows:
$32,590 − $28,974 = $3,616
$3,616 × 0.125 = $452
$1,602 − $452 = $1,150.
Vanh is entitled to a SAPTO amount of $1,150.
Mai is entitled to the maximum tax offset amount of $1,602. Her actual rebate income of $26,780 is below the shade-out threshold of $28,974.
Mai’s taxable income is also $26,780. The amount of tax payable on Mai’s taxable income exceeds the maximum SAPTO amount of $1,602. There is no unused portion of the tax offset available to transfer to Vanh.
End of exampleTransferring unused SAPTO between spouses
You and your spouse may both be eligible for the seniors and pensioners tax offset (SAPTO). If one of you does not use all of it, you may be able to transfer the unused portion to your spouse.
We will work this out for you. We will transfer any entitlement when you lodge your tax returns.
You can use the calculator to check if you have an unused amount to transfer to your spouse.
Beneficiary tax offset and seniors and pensioners tax offset calculator
SAPTO amounts for a couple
The maximum seniors and pensioners tax offset amounts for an eligible couple depends on your circumstances. If you:
- live apart due to illness, the maximum offset is $2,040 each
- live together, the maximum offset is $1,602 each.
Where your spouse's taxable income is $6,000 or less, the full amount of their offset is available for transfer.
If your spouse's taxable income is greater than $6,000, we work out their unused offset amount using the formula below:
A − ((B − $6,000) × 0.15), where
A equals the spouse's SAPTO amount for the income year
B equals the spouse's taxable income plus exempt pension income for the income year.
We reduce your offset by 12.5 cents for every dollar over your rebate threshold.
The following amounts are set out in Income Tax Assessment (1936) Act – Regulation 2015:
- rebate maximum amount – $445
- rebate reduction threshold – $37,000
- rebate reduction rate – 0.015.
The following example shows unused SAPTO transferred to a spouse who is living separately because of illness.
Example: transferring unused SAPTO – living apart due to illness
Step 1: Calculating your spouse's unused SAPTO
Your spouse's offset amount is $2,040 (report at SAPTO code B in their tax return). Their taxable income is $10,000.
The calculation is $2,040 − (($10,000 − $6,000) × 0.15) = $1,440. See how this is worked out below:
$10,000 − $6,000 = $4,000
($4,000 × 0.15) = $600
$2,040 − $600 = $1,440
You can transfer $1,440 of your spouse's unused offset if you're both eligible.
Step 2: Calculating your rebate threshold
We calculate your rebate threshold using steps A to O as follows:
- A: The maximum offset amount that applies to you = $2,040
- B: Add your spouse's unused offset amount from Step 1 ($1,440) to A
$2,040 + $1,440 = $3,480 - C: Add $445 (s159N rebate maximum amount) to B
$3,480 + $445 = $3,925 - D: Divide C by the lowest marginal tax rate of 0.19
$3,925 ÷ 0.19 = $20,657.89 - E: Add the income tax-free threshold of $18,200 to D
$20,657.89 + $18,200 = $38,857.89 - F: Is the amount at E greater than the rebate reduction threshold of $37,000?)
- if No, your rebate threshold is the amount calculated in E of $38,857.89. Go to Step 3 for the SAPTO calculation
- if Yes, continue with the steps below and your rebate threshold will be the amount calculated at step O
- G: Add the second lowest marginal tax rate of 0.325 to the rebate reduction rate of 0.015)
0.325 + 0.015 = 0.34 - H: Subtract the lowest marginal tax rate of 0.19 from G
0.34 − 0.19 = 0.15 - I: Multiply H by the rebate reduction threshold of $37,000
0.15 × $37,000 = $5,550 - J: Multiply the lowest marginal tax rate of 0.19 by the tax-free threshold ($18,200)
0.19 × $18,200 = $3,458 - K: Add $445 to J
$3,458 + $445 = $3,903 - L: Add your maximum offset amount of $2,040 to K
$3,903 + $2,040 = $5,943 - M: Add your spouse's unused offset amount of $1,440 to L
$5,943 + $1,440 = $7,383 - N: Add I and M
$5,550 + $7,383 = $12,933 - O: Divide N by G
$12,933 ÷ 0.34 = $38,039 (rounded up to the nearest dollar).
Your rebate threshold is $38,039.
Step 3: Calculating your SAPTO
We reduce your offset by 12.5 cents for every dollar amount over the rebate threshold calculated in Step 2 above ($38,039).
Your rebate income is $48,000 and your maximum offset amount is $2,040.
- A: Add your spouse's unused offset amount from Step 1 ($1,440) to your maximum offset amount
$1,440 + $2,040 = $3,480 - B: Subtract your rebate threshold calculated in Step 2 ($38,039) from your rebate income
$48,000 − $38,039 = $9,961 - C: Multiply B by the rebate reduction rate of 12.5 cents
$9,961 × 0.125 = $1,245.12 - D: Subtract the amount at C from the amount at A
$3,480 − $1,245.12 = $2,234.88.
Your SAPTO is $2,234.88 after transferring your spouse's unused offset to you.
Note: the amounts used in the calculations are set out in the Income Tax Assessment (1936 Act) Regulation 2015 section 4 as follows:
- s159N rebate maximum amount $445
- rebate reduction threshold of $37,000
- rebate reduction rate of 0.015.
Exempt pensions
For the purpose of the transfer of your spouse’s unused SAPTO, an exempt pension is either a:
- disability support pension paid under Part 2.3 of the Social Security Act 1991
- youth disability supplement (with disability support pension)
- carer payment paid under Part 2.5 of the Social Security Act 1991
- invalidity service pension (paid under Division 4 of Part III of the Veterans’ Entitlements Act 1986)
- partner service pension (paid under Division 5 of Part III of the Veterans’ Entitlements Act 1986).
Foreign residents
If your spouse is a foreign resident and their taxable income is greater than zero, we calculate their unused offset using the formula below:
A − (B × marginal tax rate), where
A equals your spouse's offset amount for the income year
B equals your spouse's taxable income for the income year.
If your spouse is a foreign resident and is also receiving an Australian Government pension or allowance, we work out their unused amount as if they were a resident.
Check if you are eligible for the seniors and pensioners tax offset (SAPTO) and if you can transfer unused offsets.