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The pensioner tax offset

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Who can get it? |  Who cannot get it? |  How much is it?

The pensioner tax offset is aimed at low income individuals who receive particular Australian government benefits, in addition to other income. The offset is intended to reduce the tax liabilities that arise from receiving additional personal income.

Note however that the pensioner tax offset and the senior Australians tax offset (SATO) are mutually exclusive and cannot be used in conjunction with each other.  According to the tax legislation, if you happen to qualify for both the SATO takes precedence over the pensioner tax offset.

Who can get it?
The pensioner tax offset applies to people who receive these payments, allowances or benefits paid by the government:
  • age pension
  • partner service pension
  • invalidity service pension
  • Defence Force income support allowance
  • widow B pension
  • sole parent pension
  • mature age allowance
  • carer payment – you or the person you are caring for is of pension age
  • disability support pension – having reached age pension age, and
  • wife pension – and either you or your partner was of age pension age.

Who cannot get it?
The pensioner tax offset does not apply where the taxpayer received:
  • the Newstart allowance
  • the youth allowance
  • Austudy payments
  • parenting payments (partnered)
  • sickness allowance
  • widow allowance
  • mature age allowance granted on or after July 1, 1996
  • special benefits
  • an allowances paid under the veterans' children education scheme.

However the taxpayer who receives these payments may be entitled to claim the beneficiary tax offset.

How much is it?
The short answer is – it depends. It is calculated by looking at how much income you receive and what thresholds you might meet, as well as your marital status and even if you are separated due to ill health from your partner, so working out the offset can become complicated.

Note that from the 2010 year, the income test uses your 'rebate income', which includes your taxable income, adjusted fringe benefits, total net investment and rental losses and reportable super contributions. Here is a handy rebate income calculator for senior Australians or pensioner tax offset.

Last reviewed 31/07/2012

NOTE: Various rebates and tax offsets apply to reduce an individual's income tax. Click here to access a table that summarises the 2011-12 and 2012-13 tax offsets for senior Australians, pensioners, mature age workers, medical expenses and tax offsets for low income earners.

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