Q: My parents are 70 years old and still working. Can they get the Mature Age Worker Tax Offset (MAWTO), and the Senior Australians Tax Offset (SATO)?
Trish’s response: The MAWTO and the SATO are subject to different tests, and individual eligibility will need to be confirmed with the ATO.
Subject to satisfying the eligibility tests, it is possible for working 70-year olds to receive the MAWTO and/or the SATO. Tax offsets, previously known as rebates, reduce the tax payable by an individual.
Although not strictly a superannuation question, I can provide you with the general rules applicable for each test and where you can go for some further information.
Mature Age Worker Tax Offset
The maximum MAWTO available is $500 each year, and the ATO automatically calculates this offset based on the information contained in an individual’s tax return.
According to the ATO, you must meet ALL of the conditions listed below to be eligible for the MAWTO:
- be an Australian resident for tax purposes
- be aged 55 years or more at the end of the income year
- have received ‘net income from working’ below the income threshold (for the 2009/10 year the threshold is $63,000)
From the start of the 2009/2010 year, ‘net income from working’ includes reportable employer super contributions (such as Superannuation Guarantee and salary sacrificed contributions).
According to the ATO website, from the 2009-10 income year, a person’s ‘net income from working’ includes:
- salary or wages
- allowances, earnings, tips and directors fees
- business and attributed personal services income
- net foreign employment income
- net amount of farm management deposits and withdrawals
- total reportable fringe benefits amounts
- reportable employer super contributions.
You need to confirm your eligibility for the MAWTO with the ATO. You can find more information about the MAWTO by clicking on this link.
Are you eligible for SATO?
The eligibility for the MAWTO is linked to income from working, while eligibility for the SATO is linked to all income.
If you have reached Age Pension age, that is 65 years for men and 63.5 years (and 64 from January 2010) for women, and you satisfy residency requirements or equivalent conditions, then you’re eligible for the Senior Australians Tax Offset, subject to meeting the income test.
The income test for the SATO relates to ‘rebate income’. According to the ATO, rebate income includes a person’s:
- taxable income
- adjusted fringe benefits (reportable fringe benefits x 0.535)
- total net investment loss
- reportable super contributions.
Note that for the MAWTO, the income test only includes reportable employer super contributions, while for SATO eligibility, the income test includes all reportable contributions, which includes personal tax-deductible contributions. Also, I believe the residency test for the two offsets is slightly different.
I explain SATO in more detail in the following articles:
- SATO: Cutting seniors tax via super contributions no longer possible
- No tax in retirement because you SATO
Anyone considering taking advantage of the MAWTO or the SATO, should confirm eligibility with the Australian Tax Office, or with your accountant.
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Related articles:
- SATO: Cutting seniors tax via super contributions no longer possible
- ‘No tax’ in retirement because you SATO
- Family tax benefits: do my tax-free super benefits count as income?
- Super for beginners, part 7: Can I split my super benefits with my spouse?
- Super for beginners, part 8: What happens to my super benefits when I retire?
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