Like all tax offsets, the Pension Tax Offset can reduce outright the amount of taxes you owe. In order to claim it, however, you must receive an Australian Government pension or allowance, your income must be below a certain limit, and you cannot already have claimed the Senior Australians Tax Offset.
Eligible pensions and allowances include:
- Newstart allowance
- Youth Allowance
- Austudy payment
- Parenting payment (partnered)
- Partner allowance
- Sickness allowance
- Special benefit
- Widow allowance
- Exceptional circumstances relief payment
- Interim income support payment
- Payment under the Veterans’ Children Education Scheme
- Payment under the Military Rehabilitation and Compensation Act Education and Training Scheme 2004
- Other taxable Commonwealth education or training payments
- An income support component of a Community Development Employment Project (CDEP)
- A CDEP scheme participant supplement
The income threshold for the Pensioner Tax Offset depends on your rebate income, which includes taxable income, adjusted fringe benefits, total net investment loss, and reportable superannuation contributions. Refer to the ATO for the income thresholds for your specific tax situation.
Starting 1 July 2012, the Pensioner Tax Offset (PTO) will merge with the Senior Australians Tax Offset (SATO) to form the Senior and Pensioner Tax Offset (SAPTO). Those previously eligible for the PTO will now be eligible for the new SAPTO.