What is the Senior Australians and Pensioners Tax Offset (SAPTO)?

The Senior Australians and Pensioners Tax Offset (SAPTO) is a tax offset available to eligible older Australians that reduces — or in some cases eliminates — the income tax payable. It effectively raises the tax-free threshold for seniors significantly above the standard A$18,200.

Eligibility: You are eligible for SAPTO if you are at or above the Age Pension age (currently 67), you are an Australian resident for tax purposes, and either you or your spouse receive an Australian government pension or allowance that is a qualifying pension (e.g. the Age Pension, service pension, or carer payment). You may also qualify if you meet the age requirement even if you do not receive the Age Pension, provided your income falls within the income test thresholds.

Maximum SAPTO amounts for 2024-25:

• Singles: A$2,230
• Couples (each): A$1,602 (combined maximum A$3,204)

Effective tax-free threshold with SAPTO: When combined with the standard low-income tax offset (LITO), SAPTO means seniors can earn significantly more before paying income tax. For singles, the effective tax-free threshold with SAPTO and LITO can be around A$36,000; for couples sharing the SAPTO, around A$32,000 each.

Shade-out: SAPTO phases out ('shades out') as income increases, at a rate of 12.5 cents per dollar above A$50,119 (singles) or A$41,790 each (couples). The SAPTO cannot create a refund — it can only reduce your tax to zero.

Unused SAPTO transfer: If one member of a couple does not use all of their SAPTO (because their income is too low to need it), the unused portion can be transferred to the other partner.