Can pensioners offset their tax?

Ted wants to know the maximum income he can earn without paying income tax.


Q. Ted
What is the maximum income a pensioner couple can have before becoming liable to pay income tax? 

A. Some older Australians may be eligible for the seniors and pensioners tax offset (SAPTO).

The SAPTO can reduce the amount of tax you are liable to pay. In some cases, it may reduce your tax liability to zero and you may not have to lodge a tax return.

To be eligible for this tax offset, you have to meet certain conditions relating to your income and eligibility for an Australian Government pension or allowance.

If you’re a senior, you must meet the age requirement for the Age Pension. This includes if you qualified for the Age Pension but did not receive it.

Depending on your rebate income, you may receive a full, partial or nil offset amount.

If you have a spouse, you will be tested on your combined rebate income for the SAPTO eligibility. The amount of the tax offset is based on your individual rebate income.

In some cases, if you are both eligible for SAPTO, you may be able to transfer your spouse’s unused offset to you. The Australian Taxation Office (ATO) calculates its transfer amount and includes this amount when calculating your SAPTO.

The ATO provides an online tool to help calculate whether you are eligible for the benefit and the amount of offset that you qualify for.

Related articles:
How to correctly report your income
What do I need to tell Centrelink?
How long to process applications?

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 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 Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Written by Ben Hocking

Ben Hocking is a skilled writer and editor with interests and expertise in politics, government, Centrelink, finance, health, retirement income, superannuation, Wordle and sports.

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