The Seniors and Pensioners Tax Offset (SAPTO) is a tax offset available to older Australians who are eligible for the Australian Government Age Pension or other qualifying government payments. SAPTO can significantly reduce — or eliminate — income tax for eligible retirees, and in some cases allows retirees to receive income above the standard tax-free threshold without paying income tax.
What Is SAPTO Worth?
The maximum SAPTO for FY2024–25 is:
| Relationship status | Max SAPTO | Effective tax-free threshold with SAPTO |
|---|---|---|
| Single | $2,230 | ~$32,279 |
| Couple (each) | $1,602 | ~$28,974 per person |
| Couple (combined) | $3,204 | ~$57,948 combined |
| Illness-separated couple (each) | $2,230 | ~$32,279 per person |
SAPTO is non-refundable — it can reduce your income tax to zero but cannot result in a cash payment to you.
Who Qualifies for SAPTO?
To be eligible for SAPTO, you must:
- Be of Age Pension age — currently 67 for both men and women (born after 1 January 1957)
- Be eligible to receive one of the following government payments (you do not need to actually be receiving the payment — eligibility is sufficient):
- Age Pension
- Carer Payment (where the carer is also of qualifying age)
- Department of Veterans’ Affairs service pension or income support supplement
- Be an Australian tax resident
You do not need to currently receive an Age Pension — if you are of Age Pension age and would meet the qualifying criteria but do not receive it (e.g., due to means testing), you may still be eligible for SAPTO.
The SAPTO Income Test (Shading-Out)
SAPTO phases out (is “shaded out”) as rebate income increases above certain thresholds:
| Status | SAPTO shade-out threshold | Rate of phase-out |
|---|---|---|
| Single | $32,279 | 12.5 cents per dollar above threshold |
| Couple (combined) | $57,948 | 12.5 cents per dollar above threshold (combined income) |
| Illness-separated couple | $32,279 each | 12.5 cents per dollar above threshold (each assessed separately) |
What is “rebate income”?
Rebate income is essentially your taxable income plus any reportable fringe benefits, reportable employer super contributions, and total net investment losses. For most retirees, rebate income equals taxable income.
Example — Single retiree with $35,000 rebate income:
Excess over threshold = $35,000 − $32,279 = $2,721
Shade-out = $2,721 × 12.5% = $340
SAPTO = $2,230 − $340 = $1,890
Unused SAPTO Transfer Between Spouses
If one member of a couple does not use their full SAPTO entitlement (because their taxable income is low enough that they have no tax to offset), the unused SAPTO can be transferred to the other spouse. This is particularly beneficial where one partner has a higher income and the other has little or no taxable income.
The transferred amount is calculated and applied automatically by the ATO when you lodge — you need to ensure your spouse’s tax return is also lodged and includes the SAPTO calculation.
SAPTO and the Medicare Levy
SAPTO reduces income tax but not the Medicare levy directly. However, low-income seniors and pensioners may also be eligible for the Medicare Levy Reduction or Medicare Levy Exemption if their income is below certain thresholds. These are assessed separately from SAPTO.
SAPTO and Super Pension Income
For those aged 60 and over, income from a taxed super fund (the vast majority of super funds in Australia) is tax-free and does not form part of assessable income or rebate income. This means many retirees drawing a super pension will have low or zero taxable income and will receive the full SAPTO regardless.
Related Articles
- Do Retirees Need to Lodge a Tax Return?
- Low Income Tax Offset (LITO) — How It Works
- Tax Offsets hub
- Taxes hub
Frequently Asked Questions
I am 65 and retired but not yet receiving the Age Pension. Do I get SAPTO? Not yet. The current Age Pension age is 67. If you are 65, you have not yet reached the qualifying age for SAPTO. Once you turn 67, provided you meet the other criteria, you become eligible.
My taxable income is $25,000. Will I pay income tax if I qualify for SAPTO? At $25,000 of taxable income, your income tax under the standard rates (excluding Medicare levy) would be approximately $1,267. If you qualify for the full SAPTO of $2,230, the offset eliminates this tax entirely (SAPTO exceeds the tax payable). You may also have LITO available, further reducing or eliminating any tax.
Does SAPTO interact with LITO? SAPTO and LITO are applied separately. If you qualify for both, each is calculated and applied to your income tax. SAPTO is applied first; if any residual tax remains, LITO is then applied. The total of offsets cannot reduce your income tax below zero (neither SAPTO nor LITO is refundable).
This article provides general tax information only. For advice tailored to your situation, speak with a registered tax agent. Find one through the Tax Practitioners Board register or visit MoneySmart.