Preparing for retirement can be a very complex, drawn-out process. But with the right guidance and by starting early in life, you can be confident you will be able to enjoy your dream retirement with peace of mind.
You may be emotionally prepared to retire, but you must also ensure that you are financially ready to face this new chapter of your life.
When considering how you’ll spend your retirement, you’ve probably considered your travel plans, spending more time with family and friends, and the hobbies you will have time for.
But, all of the fun things you plan to do in retirement will be made more enjoyable with financial security and peace of mind.
One opportunity to explore is your eligibility for SAPTO – the seniors and pensioners tax offset.
The SAPTO may be able to minimise the amount of income tax you have to pay. In turn, you can spend more money towards the things you enjoy in retirement or investing for the future to further grow your money.
What is the Seniors and Pensioners Tax Offset (SAPTO)?
The SAPTO is a special tax reduction available for senior Australians who are eligible for the Australian Government age pension (even though they may not have received a pension due to income or assets).
The SAPTO is available upon assessment of your tax return. It is a non-refundable tax offset.
Eligibility for SAPTO
You may be eligible for the seniors and pensioners tax offset (SAPTO) if you’re a senior Australian.
Eligibility for SAPTO requirements is determined by:
1. Your age
You are eligible for SAPTO if you have reached “pension age”. You are eligible if on 30 June 2021, you were 66 years or older.
2. Your residency status
You are required to have held Australian residency for more than 10 years.
3. Your eligibility for the Australian Government age pension
To be eligible for the tax offset, you must:
-
- have been the recipient of an Australian government pension or allowance
- have been the recipient of a pension, allowance or benefit. from the Department of Veteran’s Affairs
- satisfy the Centrelink age pension age requirement but did not claim the age pension because of the income test or assets test
4. Your and your spouse’s income (results from the income test)
The SAPTO is only available to lower income earners:
- Singles with income below $50,119
- Couples with combined incomes below $83,580 (couples separated due to illness have a combined income limit of $95,198)
There are other certain eligibility requirements that are more complex to claim the tax offset. If you’re still not sure whether you would be able to claim the seniors and pensioners tax offset, talk to our financial adviser at TNR Wealth Management.
How much of a Tax Offset Will You Receive?
If you are eligible for the seniors and pensioners tax offset, the amount you will receive will depend on your rebate income.
Rebate income is your total taxable income (plus fringe benefits amounts, superannuation contributions and your investment/property investment loss).
To receive the maximum SAPTO, your rebate income must be less than the cut-out threshold. If your rebate income is less than the shading-out threshold, you will receive the maximum tax offset.
| Status | Maximum tax offset amount | Shading-out threshold | Cut-out threshold |
| Single | $2,230 | $32,279 | $50,119 |
| Each partner of a couple | $1,602 | $28,974 | $41,790 |
| Each partner of an illness separated couple | $2,040 | $31,279 | $47,599 |
Retirement Planning in the Northern Rivers
Claiming the SAPTO is a great way to supplement your retirement income. But there are other ways to source income and save on tax during your retirement.
Consider the following:
- Making the most of your superannuation structures
- Structuring your investments for maximum growth and tax-efficiency
- Setting up your retirement income stream based on your personal financial circumstances
- How can you maximise the amount you receive from the Age Pension?
Retirement planning is important for anyone looking to have financial security and enjoy their best life in their golden years.
Every retirement strategy is distinct. This is why it’s critical to have a plan that’s tailored to your personal requirements.
If you’re looking for someone to assist you with your retirement planning in Byron Bay and Lismore, you can rely on TNR Wealth. We are an experienced personal financial advice team, offering expert financial planning services.
Let’s start planning your retirement today!
Contact us on (02) 6621 8544 or fill in our contact form online here.
