Announcements
We understand 2020 has been difficult and we're here to try and make it easier during tax time. Search posts, read articles or ask a question.

ATO Community

Seniors and pensioners tax offset (SAPTO)

Highlighted

Newbie

Views 1589

Replies 3

My wife became eligable (I think) for SAPTO during the current tax year due to her age. I am not old enough to qualify for SAPTO, but I think my income is somehow taken into effect in claculating her offset.

Can someone please explain how Sapto is calculated in easy to understand terms, for 2018/2019 tax year (if figures for this tax year are avaiable). I would prefer to know how it is calculated, rather than just have an ammount calculated by the ATO.

In simple terms, neither of us get ANY Austalian govenment pensions or allowances. She would not pass assets test for old age pension. Not vetrans, widows etc. No trusts or anything else special.

Thanks,

Brian

1 ACCEPTED SOLUTION

Accepted Solutions
Highlighted

Best answer

ATO Certified

Devotee

Replies 2

Hi @briangriffin,
 
Thanks for getting in touch!
For your wife to be eligible for SAPTO she will first need to meet the Condition 1 requirement at eligiblity requirements.  She can meet this SAPTO Condition 1 requirement if she was “eligible” to receive an Australian Government pension or allowance from Centrelink or a pension, allowance or benefit from the Department of Veterans' Affairs (DVA), but didn't receive anything because she didn't meet the income or asset tests, provided she met the other criteria for Condition 1.
Next, your wife has to check to see whether she passes the Condition 2 ‘rebate income’ test. Generally speaking, if the combined ‘rebate income’ of you and your wife was less than $83,580, your spouse would meet the Condition 2 test for 2018. We have a worksheet available on our website to help you calculate the rebate income amounts for you and your spouse.
If your wife passes these tests, then the amount of SAPTO offset can be calculated.
To be eligible for receiving an amount of offset, your wife must have rebate income below a certain cut-out threshold. To determine whether someone who has a spouse satisfies the cut-off threshold, their rebate income is taken to be half of the combined taxable incomes. If this amount is below the relevant cut-out threshold for the relevant year (which is $41,790 for the 2018-19 financial year), your wife will be eligible for the offset.
The maximum offset for a member of a married couple is $1,602 for the 2018-19 financial year, which is reduced by 12.5 cents for each dollar of rebate income in excess of $28,974, and once your wife’s rebate income reaches $41,790, no part of the offset is available.

Example
 John and Jane are a married couple. For the 2018-19 financial year John has a rebate income of $48,000, and Jane has a rebate income of $22,000. As such, their combined rebate income is $70,000. For the purposes of determining whether they satisfy the cut-off threshold, both John and Jane are taken to have rebate income of ½ of $70,000 = $35,000. As this is less than the relevant cut-off threshold for the 2018-19 financial year ($41,790), both John and Jane are eligible for the offset.
 As John’s actual rebate income is $48,000, he is not eligible for the offset, as his rebate income is above $41,290.
 As Jane’s actual rebate income ($22,000) is less than $28,974, she is entitled to the maximum offset of $1,602.
Note: In situations where a person’s spouse is also eligible for the offset, and is an Australian resident for the relevant financial year with a taxable income greater than $6,000, the spouse's unused part of the offset can be transferred to the other person for the purposes of calculating the threshold noted above.  However this would not apply to you, as you have stated that you are not currently eligible for the offset.


You can use our Beneficiary tax offset and seniors and pensioner tax offset calculator to help work out your eligibility and the  amount of offset you can claim.

 

Hope that helps! Thanks, Amanda

3 REPLIES 3
Highlighted

Best answer

ATO Certified

Devotee

Replies 2

Hi @briangriffin,
 
Thanks for getting in touch!
For your wife to be eligible for SAPTO she will first need to meet the Condition 1 requirement at eligiblity requirements.  She can meet this SAPTO Condition 1 requirement if she was “eligible” to receive an Australian Government pension or allowance from Centrelink or a pension, allowance or benefit from the Department of Veterans' Affairs (DVA), but didn't receive anything because she didn't meet the income or asset tests, provided she met the other criteria for Condition 1.
Next, your wife has to check to see whether she passes the Condition 2 ‘rebate income’ test. Generally speaking, if the combined ‘rebate income’ of you and your wife was less than $83,580, your spouse would meet the Condition 2 test for 2018. We have a worksheet available on our website to help you calculate the rebate income amounts for you and your spouse.
If your wife passes these tests, then the amount of SAPTO offset can be calculated.
To be eligible for receiving an amount of offset, your wife must have rebate income below a certain cut-out threshold. To determine whether someone who has a spouse satisfies the cut-off threshold, their rebate income is taken to be half of the combined taxable incomes. If this amount is below the relevant cut-out threshold for the relevant year (which is $41,790 for the 2018-19 financial year), your wife will be eligible for the offset.
The maximum offset for a member of a married couple is $1,602 for the 2018-19 financial year, which is reduced by 12.5 cents for each dollar of rebate income in excess of $28,974, and once your wife’s rebate income reaches $41,790, no part of the offset is available.

Example
 John and Jane are a married couple. For the 2018-19 financial year John has a rebate income of $48,000, and Jane has a rebate income of $22,000. As such, their combined rebate income is $70,000. For the purposes of determining whether they satisfy the cut-off threshold, both John and Jane are taken to have rebate income of ½ of $70,000 = $35,000. As this is less than the relevant cut-off threshold for the 2018-19 financial year ($41,790), both John and Jane are eligible for the offset.
 As John’s actual rebate income is $48,000, he is not eligible for the offset, as his rebate income is above $41,290.
 As Jane’s actual rebate income ($22,000) is less than $28,974, she is entitled to the maximum offset of $1,602.
Note: In situations where a person’s spouse is also eligible for the offset, and is an Australian resident for the relevant financial year with a taxable income greater than $6,000, the spouse's unused part of the offset can be transferred to the other person for the purposes of calculating the threshold noted above.  However this would not apply to you, as you have stated that you are not currently eligible for the offset.


You can use our Beneficiary tax offset and seniors and pensioner tax offset calculator to help work out your eligibility and the  amount of offset you can claim.

 

Hope that helps! Thanks, Amanda

Highlighted

Newbie

Replies 1

Thank you Amanda,

 

I would like to clarify if someone who is under the age pension age that receives DSP for the eligible tax year is still eligible for SAPTO as there seems to be some confusion in your online calculator. My partner receives DSP (i.e. an Australian Govt pension) but is under the age pension age, so according to the criteria you've referred to they should be eligible for SAPTO (I think) however on the SAPTO calculator when clicking on the definition here it only mentions that someone who receives a DSP but is over the age pension age is receiving an Australian Government 'pension and allowance' for SAPTO purposes. So I would be greatful if you could tell me if this is the case.

Highlighted

ATO Certified

Community Support

Replies 0

Hi @Janna

 

Welcome to our Community.

 

There are two conditions that a taxpayer must satisfy to be eligible for the seniors and pensioners tax offset (SAPTO). The first condition is the eligibility for Australian Government pensions or allowances and the second condition is income.

 

There are a number of Australian Government pensions or allowances that qualify for the SAPTO including the age pension, carer payment and parenting payment (single).

 

The disability support pension (DSP) also qualifies but only if the taxpayer has reached age-pension age. In turn, as your partner is below the age pension age, their DSP doesn't qualify them for the SAPTO.

 

The reason for this is because a DSP paid to a person who is under age-pension age is considered to be exempt income. In other words, the DSP isn't considered to be income for tax purposes. In turn, the SAPTO doesn't apply because your partner's DSP isn't taxable.

 

You can find out more about exempt income on the individual tax return instructions 2019 page on our website. You can also find out more about the SAPTO by referring to the T1 seniors and pensioners (includes self-funded retirees) 2019 section of the instructions.

 

Hope this helps.

 

Thanks,

 

ChrisR