Q Could you please explain how Senior Age Tax Offset (SATO) is calculated.  I am trying to determine how much tax I will pay and or rebate I should expect to receive.


A The Senior Age Tax Offset (SATO) is a tax offset available to taxpayers over Age Pension age, receiving an Age Pension and subject to an income test.  If you are single, you can earn up to $30,685 taxable income this Financial Year and pay no tax after allowing for the offset.  For a couple, the aggregate taxable income is $53,360 combined.  Please note that income counted includes earned income, Deductible Superannuation Contributions and fringe benefits.


Any unused offsets can be transferred between partners.  If an individual or a couple’s income exceeds the cut off threshold, they are no longer eligible for SATO. Please note from 1 July 2012 SATO will become Senior and Pensioner Tax offset (SAPTO)


The Formula for calculating a SATO entitlement for Singles is $2,230 – ((Taxable Income – $30,685) / 8)

The Formula for calculating a Couples SATO entitlement is $3,204 – ((Taxable Income – $53,360) / 8).


Another way of calculating your entitlement is to understand that the threshold reduces by 12.5 cents for every dollar of income above the Shade Out threshold.


Category Shade Out Income Threshold Cut-Out Income Threshold Maximum Tax Offset Available
Single $30,685 $48,525 $2,230
Couple (each)* $26,680 $39,496 $1,602
Couple (combined) $53,360 $78,992 $3,204*


Alternatively the ATO website has calculators to determine your specific entitlements!