Saving Tax for Seniors with the Senior Australian Tax Offset
Retirement income streams receive preferential treatment from the government with respect to taxation and social security treatment.
By utilising the Senior Australian Tax Offset (SATO) and the low income tax offset, single persons and couples can reduce tax payable. The Medicare levy thresholds applying to Senior Australians coincide with the tax thresholds so Medicare levy will be payable only if there is a tax liability.
In order to qualify for SATO you must be of age pension age or if eligible, veteran pension age. For the 2007/08 financial year the maximum rebate under SATO is $2,230 for singles earning up to $25,867* and $3,204 for
couples earning up to $43,360* combined (depending on the income earned by each member of the couple). Note special limits apply if you are a couple and have to live appart due to illness or because one person needs to live in a nursing home. The rebate is reduced by 12.5 cents for every dollar over these income levels with cut-offs shown in the following table.
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SATO 2007/08 Financial Year
|
|
Status
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Low
Threshold
|
Cut-off
|
|
Single
|
$25,867*
|
$43,707
|
|
Couple
(each)
|
$21,680*
|
$34,496
|
*BUDGET 08/09 UPDATEProposed new marginal tax rate thresholds for the 2008/09 financial year applicable from 1 July 2008 mean these thresholds will effectively increase to $28,867 for singles and $24,680 each for couples.
Proposed new marginal tax rate thresholds for the 2009/10 financial year applicable from 1 July 2009 mean these thresholds will effectively increase to $29,867 for singles and $25,680 each for couples.
Proposed new marginal tax rate thresholds for the 2010/11 financial year applicable from 1 July 2010 mean these thresholds will effectively increase to $30,685 for singles and $26,680 each for couples.
The Medicare levy thresholds applying to Senior Australians are also to be increased to coincide with the tax thresholds so Medicare levy will still only be payable if there is a tax liability.
It is also proposed that from 1 July 2009 the definition of income used to calculate this offset will be expanded to include reportable fringe benefits.
If you would like more
information on tax rebates available on super pensions
or would like to speak to a financial planner to learn
just how you could benefit from the Senior Australian
Tax Offset simply follow this link: Enquiries
Desk and mention "SATO".
Source: Personal Wealth
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