Tax offsets - what they doLow income tax offset for aged persons NOT receiving the pension
Tax offset for low income aged persons who do not receive the pension
You can share the rebate with your spouse if you don't need it all yourself
Telling the Tax Office how much rebate you think you should get - the indicators
Age pensioners get a rebate to free them from having to pay tax on low incomes and so do persons of age pension age who do not receive the age pension
Section 160AAA allows a rebate to age pensioner with low incomes.
Section 160AAAA allows a rebate to age pension age taxpayers with low incomes.
They are broadly equivalent and are intended to ensure that such people can earn a small amount of income in excess of the age pension and still not be required to pay income tax.
Aged Persons (no pension) Low Income tax offset - who gets it?
If you were of Age pension age on 30 June (65 years or more for a male or 60.5 years or more for a female), you may be eligible for the tax rebate for low income aged persons.
To be eligible for this rebate:
you must not have received an Australian government benefit or pension during the income year
you must have been a resident for Age pension purposes
you must not be eligible to claim a beneficiary or pensioner rebate
you satisfy the income test that applies to you
How much income can you derive and still get the rebate?
|
Marital status |
Maximum income permissible (1997 ) |
|
You did not have a spouse (married or de facto) |
21,377 |
|
You did have a spouse (married or de facto) |
33,368 (combined) |
|
You did have a spouse(married or de facto)and the taxable income of you and your spouse, where you were separated due to illness |
41,116 (combined) |
Taxable income of you and your spouse for the purposes of this rebate includes trust distributions in respect of a presently entitled beneficiary who is under a legal disability.
What amount of rebate is allowed?
|
Type of taxpayer |
You will get the full rebate if your taxable income is equal letter to or less than this amount |
You will get a partial rebate if your taxable income is equal letter to or less than this amount |
Maximum rebate (1997 income year) |
|
Single or widowed Separated Sole parent |
$ 11,545
|
$21,377 |
$614.50 |
|
You did have a spouse(married or de facto) You were separated due to illness You were both eligible for rebate |
$ 11,230 |
$ 20,558 |
$583 |
|
You did have a spouse(married or de facto) You were separated due to illness Your partner is ineligible for rebate |
$ 11 230 |
$ 20 558 |
$583 |
|
You did have a spouse(married or de facto) You were living together You were both eligible for rebate |
$ 9740 |
$ 16 684 |
$434 |
|
You did have a spouse(married or de facto) You were living together Your partner is ineligible for rebate |
$ 9740 |
$ 16 684 |
$434 |
The rebate shades out by 12.5 cents for each dollar in excess of the amount, which provides the maximum rebate
You can share the rebate with your spouse if you don't need it all yourself
Mr Smith's taxable income is $11268. Mrs Smith's taxable income if $9128.
A rebate of $868 is allowable if taxable income of a married pensioner is less than $9740 (this is phased out until taxable income of $16684 when it reaches zero).
Because Mrs Smith's taxable income was only $9128, she only needed $745 of the possible $868 pension rebate. So Mrs Smith did not use $123 of this rebate.
The tax law allows Mr Smith to take advantage of some part of that $123 to reduce his tax liability.
To work out how much Mr Smith can use we do the following...
The unused portion of the pensioner rebate is the difference between
the pension rebate and the tax calculated on the taxable income
or notional taxable income.
In Mrs Smith's case because she receives no exempt income it is the difference between $868 and $745 which is $123.
How to calculate the pensioner rebate for Mr Smith.
Mr Smith's maximum adjusted rebate is
the partnered pensioner rebate
plus
the unused portion of the pensioner rebate transferred from Mrs Smith.
That is, $868 plus $123 which is $991
How to calculate the adjusted pensioner rebate threshold for Mr Smith.
Mr Smith's adjusted pensioner rebate threshold is
the general tax free threshold $5,400
plus
the maximum adjusted rebate divided $991
by the lowest marginal tax rate. .20 $4955 {that's 991/.2}
That is, $9750
The rebate to which Mr Smith is now entitled is
the maximum adjusted rebate $991
less
the difference between
the taxable income and $11,268
the adjusted pensioner rebate threshold $ 9,750
all divided by 8. $1518 $189.75
That is, $680.25
Telling the Tax Office how much rebate
you think you should get - the indicators
When you are editing this item, you will be presented with a pick list of descriptions of the circumstances of the taxpayer. By high lighting the appropriate description, you tell the Tax Office computer how much rebate it should calculate. Here is what the Commissioner has to say about the use of the codes.
A At any time during the year the taxpayer was:
• single or widowed, or
• separated, or
• a sole parent.
B The taxpayer and their spouse—married or de facto—had to live apart due to illness or either of them was in a nursing home at any time during the income year and they are both eligible for this rebate.
C The taxpayer and their spouse—married or de facto—had to live apart due to illness or either of them was in a nursing home at any time during the income year but the taxpayer's spouse is ineligible to claim this rebate due to the conditions below.
D The taxpayer and their spouse—married or de facto—were living together and they are both eligible for this rebate.
E The taxpayer and their spouse—married or de facto—were living together but the taxpayer's spouse is ineligible to claim this rebate due to the conditions given below.
CONDITIONS:
1. The taxpayer must not have received a Commonwealth of Australia government pension, allowance or payment during the year.
2. The taxpayer must have been a resident for age pension purposes–for at least 10 years.
3. The taxpayer must not be eligible to claim a beneficiary or pensioner rebate at item
5 or 6.4. The taxpayer satisfies the income test that applies to them:
a) the taxpayer did not have a spouse—married or de facto—and the taxpayer's taxable income was less than the threshold amount.
b) the taxpayer did have a spouse—married or de facto—and the taxable income of the taxpayer and their spouse was less than the threshold amount.
c) the taxpayer did have a spouse—married or de facto—and the taxable income of the taxpayer and their spouse, where they were separated due to illness, was less than the threshold amount.
.
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