Understanding SAPTO (Senior Australians and Pensioners Tax Offset)
Understanding SAPTO: Senior Australians and Pensioners Tax Offset 2026–27
The Senior and Pensioners Tax Offset (SAPTO) can reduce the amount of income tax payable by eligible older Australians, including some self-funded retirees.
SAPTO can be particularly relevant when planning for retirement, superannuation, investment income and the succession of a family business.
What is SAPTO?
SAPTO is a non-refundable tax offset. This means it can reduce your income tax, potentially to nil, but any unused amount is generally not refunded or carried forward to another financial year.
Who is eligible for SAPTO?
Eligibility is more involved than simply reaching a particular age.
Generally, you need to meet the eligibility requirements for an Australian Government pension or qualifying allowance and satisfy the relevant rebate income requirements.
For Age Pension purposes, the qualifying age is now 67. Importantly, you may potentially qualify for SAPTO even if you do not receive the Age Pension because you did not apply or because of the income or assets tests, provided the other eligibility requirements are satisfied.
What are SAPTO thresholds for 2026–27?
Single
Maximum SAPTO: $2,230
Full offset up to rebate income of $36,034
SAPTO fully phases out at $53,874
Each member of a couple
Maximum SAPTO: $1,602
Full offset up to rebate income of $31,847
SAPTO fully phases out at $44,663
Each member of an illness-separated couple
Maximum SAPTO: $2,040
Full offset up to rebate income of $34,767
SAPTO fully phases out at $51,087
Above the relevant threshold, SAPTO reduces by 12.5 cents for each additional $1 of rebate income until it is exhausted.
What income is considered for SAPTO?
SAPTO is tested using rebate income, which can be different from your taxable income.
Rebate income can include:
taxable income;
reportable employer superannuation contributions;
deductible personal superannuation contributions;
net financial investment losses;
net rental property losses; and
reportable fringe benefits.
This is why effective tax planning and advice should consider your overall financial position rather than taxable income alone.
Can you receive SAPTO and LITO?
Yes. An eligible taxpayer may receive both the Low Income Tax Offset (LITO) and SAPTO. The former Low and Middle Income Tax Offset (LAMITO) no longer applies. For 2026–27, the maximum LITO remains $700.
Can unused SAPTO be transferred to spouse?
Potentially, yes. Where both spouses are eligible for SAPTO, an unused portion of one spouse’s offset may be available to the other spouse, depending on their circumstances.
This can make the allocation and timing of income between spouses relevant when planning for retirement.
SAPTO and retirement tax planning
SAPTO should rarely be considered in isolation.
Your retirement position might also include:
business or employment income;
company and trust distributions;
rental and investment income;
capital gains;
superannuation;
business succession; and
the sale or transfer of business assets.
Superannuation can be particularly important. From 1 July 2026, contribution limits have increased, creating additional planning opportunities for some taxpayers. Read more about the 2026–27 superannuation contribution caps. Getting the structure and timing right before a transaction occurs can materially affect the tax outcome.
SAPTO for doctors and medical professionals
For doctors, specialists and medical practice owners, retirement can be more complex than simply stopping work.
Income may continue to come from a medical practice, companies or trusts, investments, property, superannuation or the eventual sale of an interest in the practice.
Doctors considering retirement should therefore review SAPTO as part of their broader tax structure, superannuation and succession strategy.
For medical practice owners still operating a practice, there are also important structuring and employment tax considerations. See our guide to contractor and payroll tax rules for medical and allied health practices.
Planning for retirement or succession?
Tax planning is generally most effective before you restructure, sell assets or change how you receive income.
PRATT Partners provides tax and structuring advice to business owners, doctors, medical professionals, families and private clients across Australia.
If you are approaching retirement, selling or restructuring a medical practice, or planning business succession, we can review how your structures, superannuation and expected retirement income work together.
Speak with PRATT Partners about your tax and retirement planning.
This information is general in nature and does not take into account your individual circumstances. Tax, superannuation and social security rules can change. Professional advice should be obtained before acting.
