Transferring unused seniors and pensioners tax offset
Check if you're eligible to transfer any unused portion of the seniors and pensioners tax offset (SAPTO) to your spouse.
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Eligibility for transferring SAPTO
If you and your spouse are both eligible for the seniors and pensioners tax offset (SAPTO) and one of you does not use all of it, the unused portion may be available for transfer to your spouse.
We will work this out for you and transfer any entitlement when you lodge your tax returns.
You can use the Beneficiary tax offset and seniors and pensioners tax offset calculator to work out if an amount is available for transfer to your spouse.
SAPTO amounts
The maximum SAPTO amounts for an eligible couple, depends on your circumstances. If you:
- live apart due to illness, the maximum SAPTO amount is $2,040 each
- live together, the maximum SAPTO amount is $1,602 each.
If your spouse has taxable income greater than $6,000, we work out their unused SAPTO 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.
The amount of $6,000 is not a reflection of the tax-free threshold, but an amount set by Income Tax Assessment (1936 Act) Regulation 2015 subparagraph 12(3)(b(ii).
Exempt pension
For the purpose of the transfer of your spouse’s unused SAPTO, exempt pension is a:
- disability support pension paid under Part 2.3 of the Social Security Act 1991
- youth disability supplement if disability support pension was received
- 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 your spouse’s unused SAPTO amount using the formula below.
A − (B × marginal tax rate)
Where:
- A equals your spouse's SAPTO 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 your spouse’s unused SAPTO amount as if they were a resident.
Example of unused SAPTO transfer
The following example may be a useful reference to show how we work out the transfer amount for unused SAPTO between spouses.
Example: Australian residents living apart due to illness
Step 1: Calculating your spouse's unused SAPTO
Your spouse's SAPTO amount is $2,040 (circumstance code B) and their taxable income is $10,000. The calculation would be $2,040 − (($10,000 − $6,000) x 0.15) = $1,440. Worked out as below:
$10,000 − $6,000 = $4,000
($4,000 × 0.15) = $600
$2,040 − $600 = $1,440
$1,440 of your spouse's unused SAPTO is available for transfer to you if you're eligible.
Note: Where your spouse is eligible for the SAPTO and their taxable income is $6,000 or less, the full amount of their SAPTO amount – for example, $2,040 is available for transfer to you.
Step 2: Calculating your rebate threshold
Your SAPTO will be reduced by 12.5 cents for every dollar over your rebate threshold.
Your rebate threshold is calculated as follows:
- A: The maximum SAPTO amount that applies to you = $2,040
- B: Add your spouse's unused SAPTO amount from Step 1 ($1,440) to A, that is
$2,040 + $1,440 = $3,480
- C: Add $445 (see note 1) to B, that is
$3,480 + $445 = $3,925
- D: Divide C by the lowest marginal tax rate of 0.19, that is
$3,925 ÷ 0.19 = $20,657.89
- E: Add the income tax-free threshold of $18,200 to D, that is
$20,657.89 + $18,200 = $38,857.89
- F: Is the amount at step E greater than the rebate reduction threshold of $37,000? (see note 2)
- if No, your rebate threshold is the amount calculated in step 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 (see note 3), that is
0.325 + 0.015 = 0.34
- H: Subtract the lowest marginal tax rate of 0.19 from G, that is
0.34 − 0.19 = 0.15
- I: Multiply H by the rebate reduction threshold of $37,000, that is
0.15 × $37,000 = $5,550
- J: Multiply the lowest marginal tax rate of 0.19 by the tax-free threshold ($18,200), that is
0.19 × $18,200 = $3,458
- K: Add $445 to J, that is
$3,458 + $445 = $3,903
- L: Add your maximum SAPTO amount of $2,040 to K, that is
$3,903 + $2,040 = $5,943
- M: Add your spouse's unused SAPTO amount of $1,440 to L, that is
$5,943 + $1,440 = $7,383
- N: Add I and M, that is
$5,550 + $7,383 = $12,933
- O: Divide N by G, that is
$12,933 ÷ 0.34 = $38,038 (rounded to the nearest dollar)
Your rebate threshold is $38,038.
Step 3: Calculating your SAPTO
Your SAPTO will be reduced by 12.5 cents for every dollar amount over the rebate threshold calculated in Step 2 ($38,038).
Your rebate income is $48,000 and your maximum SAPTO amount is $2,040.
- A: Add your spouse's unused SAPTO amount from Step 1 ($1,440) to your maximum SAPTO amount, that is
$1,440 + $2,040 = $3,480
- B: Subtract your rebate threshold calculated in step 2 ($38,038) from your rebate income, that is
$48,000 − $38,038 = $9,962
- C: Multiply B by the rebate reduction rate of 12.5 cents, that is
$9,962 × 0.125 = $1,245.25
- D: Subtract the amount at C from the amount at A, that is
$3,480 − $1,245.25 = $2,234.75
Your SAPTO is $2,235 (rounded up to the nearest whole dollar) after transferring your spouse's unused SAPTO amount to you.
Note 1: $445 is set by Income Tax Assessment (1936 Act) Regulation 2015 section 4.
Note 2: The rebate reduction threshold of $37,000 is set by Income Tax Assessment (1936 Act) Regulation 2015 section 4
Note 3: The rebate reduction rate of 0.015 is set by Income Tax Assessment (1936 Act) Regulation 2015 section 4
End of example