How does SAPTO work? (Senior Australians and Pensioners Tax Offset)

There are two eligibility requirements for the SAPTO:

1. You must be eligible to receive the Age Pension or Department of Veterans’ Affairs (DVA) Pension.

The Age Pension age in Australia currently depends on your date of birth. The minimum age from 1 July 2021 is 66 years and 6 months, and this will rise to 67 from 1 July 2023. The minimum age for the DVA pension is 60.

2. You must pass a rebate income threshold test to determine whether you’re entitled to a full or partial offset.

Your rebate income is the total of the following items:

• Your taxable income (if any). Your taxable income is your assessable income less any deductions that you’re eligible to claim.
• Your reportable employer super contributions (if any). Reportable employer super contributions are any contributions that your employer makes on your behalf that are above the compulsory Superannuation Guarantee (currently 10% of salary or wages).
• Your deductible personal super contributions (if any). Deductible personal super contributions are any that you have voluntarily made to a super fund and claimed as a tax deduction on your tax return. To claim a tax deduction for personal super contributions, you must have notified your fund of your intention to do so and received an acknowledgment in writing from them.
• Your net financial investment loss (if any). This includes any loss you may have made from investing in assets like shares or managed funds.
• Your net rental property loss (if any). A net rental property loss occurs when your expenses associated with the property exceeds the rental income it generates. This is known as negative gearing.
• Your fringe benefits (if any). Fringe benefits include any benefits that your employer provides as part of your salary package, such as a company car for private use, or the reimbursement of personal expenses.

What are the SAPTO thresholds for singles?

If you’re single, your total rebate income must be less than $32,279 for the financial year to be eligible for the maximum SAPTO of $2,230.

The SAPTO progressively reduces by 12.5 cents for every dollar over this amount, up to a rebate income level of $50,119 (where the offset cuts off completely).

The SAPTO at various individual rebate income levels is shown in the table below.

Single rebate income	Tax offset
Less than $32,279	$2,230.00
$34,000	$2,014.88
$36,000	$1,764.88
$38,000	$1,514.88
$40,000	$1,264.88
$42,000	$1,014.88
$44,000	$764.88
$46,000	$514.88
$48,000	$264.88
$50,000	$14.88
$50,119	$0

Source: Estimates interpreted by SuperGuide according to information published by the ATO.

Note: These figures cover the 2016-17 financial year through to and including the 2020–21 financial year.

Can you apply the Low Income Tax Offset (LITO) and SAPTO at the same time?

Yes, the Low Income Tax Offset (LITO) can be applied by the ATO in conjunction with SAPTO. You’re entitled to a LITO of $700 if your taxable income is less than $37,500. LITO reduces by 5 cents for each dollar of taxable income above $37,500, and reduces a further 1.5 cents for every dollar above $45,000, before it cuts out completely when your taxable income reaches $66,667.

What are the SAPTO thresholds for couples living together?

If you have a spouse and you’re living together, your combined rebate income is tested to determine your SAPTO eligibility. This combined income must be less than $57,948 for you to receive the maximum combined spousal SAPTO of $3,204.

The spousal SAPTO progressively reduces by 12.5 cents for every dollar of combined rebate income levels higher than this amount, up to $83,580 (where the offset cuts off completely).

The SAPTO for couples living together at various combined rebate income levels is shown in the table below:

Combined rebate income	Maximum tax offset
Less than $57,948	$3,204 ($1,602 each)
$60,000	$2,948 ($1,474 each)
$62,000	$2,698 ($1,349 each)
$64,000	$2,448 ($1,224 each)
$66,000	$2,198 ($1,099 each)
$68,000	$1,948 ($974 each)
$70,000	$1,698 ($849 each)
$72,000	$1,448 ($724 each)
$74,000	$1,198 ($599 each)
$76,000	$948 ($474 each)
$78,000	$698 ($349 each)
$80,000	$448 ($224 each)
$82,000	$198 ($99 each)
$83,580	$0

Source: Estimates interpreted by SuperGuide according to information published by the ATO.

Note: These figures cover the 2016–17 financial year through to an including the 2020–21 financial year.

What if you’re a couple and only one of you is eligible for the SAPTO?

If you’re eligible for SAPTO and your spouse is not, the ATO still considers your combined rebate income as a couple to determine your eligibility in the first instance.

If you’re below the maximum combined rebate income threshold, you could still be entitled to the SAPTO.

However, the amount of offset you are entitled to will be calculated on your rebate income alone.

This two-step eligibility process leads to some perverse outcomes, which are best illustrated with an example.

Can you transfer any unused SAPTO amounts between you and your spouse?

It’s important to remember that tax offsets (like SAPTO) can only be used to offset tax you owe; they can’t give you a refund from the ATO.

That means it’s possible for a person to not use all their SAPTO. In this situation you can transfer your excess SAPTO to your spouse, provided they’re eligible to receive it.

This is best illustrated with another example.

What are the SAPTO thresholds for couples separated due to illness?

If you and your spouse are separated due to illness, the offset amount and the minimum and maximum rebate income thresholds that you’re entitled to are all higher to reflect that your combined living expenses are likely to be higher.

Your combined rebate income must be less than $62,558 for you to receive the maximum combined spousal SAPTO of $4,080 ($2,040 each).

The spousal SAPTO progressively reduces by 12.5c in the dollar for combined rebate income levels higher than this amount, up to $95,198 (where the offset cuts off completely).

The SAPTO for couples separated due to illness at various combined rebate income levels is shown in the table below.

Combined rebate income	Maximum tax offset
Less than $62,558	$4,080 ($2,040 each)
$64,000	$3,900 ($1,950 each)
$66,000	$3,650 ($1,825 each)
$68,000	$3,400 ($1,700 each)
$70,000	$3,150 ($1,575 each)
$72,000	$2,900 ($1,450 each)
$74,000	$2,650 ($1,325 each)
$76,000	$2,400 ($1,200 each)
$78,000	$2,150 ($1,075 each)
$80,000	$1,900 ($950 each)
$82,000	$1,650 ($825 each)
$84,000	$1,400 ($700 each)
$86,000	$1,150 ($575 each)
$88,000	$900 ($450 each)
$90,000	$650 ($325 each)
$92,000	$400 ($200 each)
$94,000	$150 ($75 each)
$95,198	$0

Source: Estimates interpreted by SuperGuide according to information published by the ATO.

Note: These figures cover the 2016–17 through to and including the 2020–21 financial year.

The bottom line

The ATO guidelines around SAPTO are complex and, for some couples, confusing and potentially inequitable.

Whatever your circumstances, we suggest you go to the ATO Senior Australians and Pensioners Tax Offset (SAPTO) calculator to work out how much SAPTO you might be eligible for.