How does SAPTO affect your retirement income?


No, its not a new brand of washing detergent, it’s the seniors and pensioners tax offset. Here’s how it works.

Key Points


  • The seniors and pensioners tax offset (SAPTO) is a non-refundable tax offset
  • The SAPTO can reduce the amount of tax you are liable to pay
  • It may reduce your tax payable to zero and you may not have to lodge a tax return

If you’re of a certain age and income – you may be eligible for a tax offset to reduce your tax liability. Its called the seniors and pensioners tax offset or SAPTO for short. And it’s important to know its benefits when planning your retirement.

To be eligible for SAPTO, you must meet certain conditions relating to:

To determine your eligibility, there is a link to the ATO’s SAPTO calculator below, which also helps you to determine the amount of offset you can claim.

But first, here’s the nitty gritty of eligibility.

Government pension requirements


In 2019–20, you must have received a pension or be eligible for a pension from either Centrelink or the Department of Veterans’ Affairs (DVA) via Centrelink. You are eligible if:

  1. You received an Australian Government pension or allowance from Centrelink
  2. You satisfied the Centrelink age pension age requirement and were eligible for an Australian Government age pension during the income year but didn't receive it because you didn't make a claim or because of the application of the income test or assets test and you satisfy one of the following:
  • you have been an Australian resident for age-pension purposes for either 10 continuous years or for more than 10 years of which five years were continuous
  • you have a qualifying residence exemption (because you arrived in Australia as a refugee or under a special humanitarian program)
  • you are a woman who was widowed in Australia (at a time when both you and your late partner were Australian residents), you have made a claim for the age pension and you had two years residence immediately before your claim
  • you received a widow B pension, widow allowance, or partner allowance immediately before turning age-pension age
  • you would qualify under an international social security agreement via Department of Veterans’ Affairs (DVA).

    You are eligible if:
  • you received a pension, allowance or benefit from the Department of Veterans’ Affairs (DVA)
  • you satisfied the veteran pension age test and were eligible for a pension, allowance or benefit from Veterans’ Affairs during the income year, but didn't receive it because you didn't make a claim or because of the application of the income test or assets test and you satisfy either of the following:
  • you were a veteran with eligible war service
  • you are a Commonwealth veteran, allied veteran or allied mariner with qualifying service.

Income eligibility


Eligibility for SAPTO under income requirements depends on your relationship status. You will be eligible for SAPTO if:

  • you are single and your rebate income was less than $50,119
  • you have a spouse and the combined rebate income of you and your spouse was less than $83,580 (less than $41,790 income for each partner)
  • at any time during the year, you and your spouse had to live apart due to illness or because one of you was in a nursing home, and the combined rebate income of you and your spouse was less than $95,198.

Offset amount


To be entitled to an amount of SAPTO, your rebate income must be less than the relevant cut-out threshold in the table below. If your rebate income is less than the shading-out threshold, you will be entitled to the maximum tax offset amount.

If more than one item in the table above applies to you during the income year, your offset amount will be based on the amount that gives you the greatest entitlement.

Determining your eligibility and offset amount


One of the benefits of the modern internet age is that you don’t have to understand all of this to determine if you are eligible. Thanks to the ATO, you can quite easily, from the comfort of you own living room, determine your eligibility and offset amount.

To do this simply use the ATO’s Beneficiary tax offset and seniors and pensioner tax offset calculator.