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

The Senior Australians and Pensioners Tax Offset (SAPTO) won’t shower you in riches. But depending on your age, relationship status and income, it could provide a handy tax offset of up to $2,230 for singles and up to $3,204 for couples.

Before you get too excited, a heads up. The devil is in the detail and some retirees may feel short-changed.

What is a tax offset?

A tax offset can reduce the amount of income tax you pay, but it doesn’t mean you get a refund of any offset amount remaining once your tax bill is reduced to zero. You’ll also still need to pay the Medicare levy if you’re not eligible for an exemption or reduction.

The Australian Taxation Office (ATO) assesses your eligibility when you submit your tax return.

Who is eligible for SAPTO?

There are two eligibility requirements for SAPTO:

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

The Age Pension age in Australia depends on your date of birth. From 1 July 2023 the minimum age increased to 67 for anyone born after 31 December 1956. The minimum age for the DVA pension is 60.

2. You (and your partner) 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 11% 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.
• 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 exceed 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 $34,919 for the 2024-25 financial year to be eligible for the maximum SAPTO of $2,230. This is known as the Shade out threshold.

The SAPTO progressively reduces by 12.5 cents for every dollar over this amount, up to a rebate income level of $52,759 (where the offset cuts off completely). This is known as the Cut out threshold.